By Ray Birch
NAPERVILLE, Ill.– Alloya Corporate FCU said its acquisition of QCash Financial is aimed at extending a payday alternative to more credit unions while also helping it take the next step in its evolution.
As CUToday.info reported, Alloya Corporate FCU has acquired the Olympia, Wash.-based QCash Financial, formerly a CUSO of Washington State Employees CU that provides a platform for quickly approving small-dollar loans. QCash, founded in 2015, is now an independent, wholly-owned CUSO of Alloya.
Alloya President and CEO Todd Adams told CUToday.info the corporate has been focused on helping credit unions automate payments, but was looking to extend its digital capabilities to lending.
Todd Adams
“At Alloya, we had reached the point where we had gone about as far as we could with our three levels of offerings—payments, investments and liquidity. We have worked hard in the last 12 years to innovate around those three sets of capabilities, and we were ready to expand what we could do for credit unions,” said Adams. “We got to the point where we said we're looking for that fourth set of capabilities, which is automated lending. We thought QCash would be a great way to start.”
Natural Next Step
Adams believes the addition of automated lending tools to help credit unions is the natural next step for the corporate CU as it, like other corporates, has had to make strategic changes following the 2008 financial crisis.
“I don't think corporate credit unions get enough credit for how innovative we have become,” said Adams. “There are many examples I could share. Every day our technology team works hard to find ways to help credit unions with their back office problems. I do think it's a new day for corporate credit unions, and Alloya in particular.”
Good Timing
Adams said the timing of the deal for QCash Financial was also good.
“Our mission is to support credit union success, and we do that by simplifying the credit unions back-office life. We were already in a referral arrangement with QCash,” he said.
‘Great Member Experience’
Seth Brickman
Meanwhile, Seth Brickman, CEO of QCash Financial, said another aspect delivered by QCash has helped to drive its growth.
“It's a great member experience,” Brickman said. “The technology greatly simplifies the credit union’s back office life and brings new capabilities to what credit unions can do for their members and their communities. QCash partners with credit unions and we help their members deal with life events—with a click on a link they can have money in their account, often in under 60 seconds.
“We do that by digitizing the entire loan process so our loans require no interaction from loan origination personnel and we have a patented relational underwriting algorithm that allows us to give loans to the correct members that credit unions are currently declining, to really drive financial inclusion.”
Solution in ‘The Pocket’
Brickman added that with the online lending tool, members go from having life a problem to a cash solution “that’s in their pocket in under 60 seconds,” continued Seth.
“Under the leadership of Washington State Employees Credit Union, we grew tremendously, and QCash now helps over 20,000 families a month stay out of predatory lending, and stay in the safe hands of their credit union,” Brickman said. “As we looked to continue to scale and grow, Washington State CU had been an amazing owner for us. But as we looked at how the economic conditions were developing, (we felt we) could do more to help more credit unions help more members…”
An Easy Decision
Gary Swindler
The decision to sell the CUSO was not difficult, according to Gary Swindler, WSECU president and CEO.
“Alloya focuses on serving credit unions, and the fact that they are so dedicated to the credit union industry, that they are really an innovator and a technology company hiding as a corporate credit union, it just made that decision easy,” Swindler said.
Why CUSO Was Created
Swindler explained the CUSO was created after WSECU realized it needed a better way for its members to access small-dollar loans.
“First, we just wanted to be a better value for our members who were actively using payday lenders,” explained Swindler. “Then, in about 2015, we came up with the idea of commercializing QCash so other credit unions could help their members. We started signing credit unions, and now we have 100 clients. Our growth has really taken off in recent years as we became much more well known…And it just made sense that Alloya could take QCash to the next level.”
The ’Secret Sauce’
Brickman beleives QCash is especially helpful to smaller credit unions in delivering small-dollar loans with little to no effort required of their own back offices.
“One of one of the ingredients in our secret sauce is QCash deeply integrates with the banking core that allows us, whenever we get a loan, to write the loan to the core,” Brickman explained. “We write the loan to the core in the GL entry. We write the auto payment schedule and we physically transfer money from the credit union to the member. Loans through the QCash platform require no interaction with loan personnel, which means a those small credit unions or large credit unions, their teams can work on higher-value items.
“This allows credit unions to be able to give small-dollar loans 24/7 from any digital device from anywhere, without any interaction from credit union personnel.”
The average QCash loan size, while it varies a great deal by credit union, is about $1,400 with a nine-month repayment. Pricing is “based on CU asset size,” Alloya added.