Credit union members have faced several challenges over the past few weeks. A federal government shutdown and the potential disruption of SNAP benefits exacerbated the years-long cost-of-living challenge. Amid all this upheaval, members needed solutions to help navigate this period. How could credit unions show up for members in a time like this?
For one credit union, the answer was microloans that bridge short-term financial shortfalls.
Digital, automated microloans
Microloans are loans of $50 to $2000, repaid in equal monthly installments. They do not rely on credit score for underwriting, and are available through a fully digital, automated application flow. This benefits the credit union, which doesn’t need to deploy additional staff resources to process these loan applications. And, it benefits the member, who now has the flexibility to access emergency funds at a responsible interest rate 24/7 from the credit union they trust. One credit union had a ready-made solution for members in need when they needed it.
GFA Federal Credit Union offers microloans to members through a fully digital, automated application flow in partnership with Salus. This meant that, as members needed emergency access to funds, the credit union could serve them without placing an excessive burden on its staff.
- Their application was available 24/7, and during the first week of November, members were applying for loans at all hours of the day and night. In one example, a member applied online at 5:15 PM instead of showing up to the branch 15 minutes too late to get help. She applied online and got the money she needed in minutes.
- Member applications took less than seven minutes on average from the initiation of the microloan application to completion, signature, and funding of the loan. This process occurred without any staff time and complied with all the credit union’s underwriting criteria and procedures.
- Members received help for a variety of needs. The most common shared by applicants were to help with food and groceries, utility payments, unexpected car repairs, and winter items.
GFA’s impact in action
Over the course of one week, GFA disbursed over $54,000 in emergency microloans for members who needed fast cash. Using a digital, automated flow freed up 51 hours of staff time. Instead of completing back-office processes on these small-dollar loans, employees continued their work without compromising member service.
The best part? GFA members saved more than $201,000 in fees and interest by getting this loan from their credit union instead of an online or payday lender charging predatory rates. That is the quantified community impact credit unions can make when they bring members the solutions they need.
Takeaways
GFA’s experience is instructive in several ways. First, the credit union listened to its members’ needs and responded with an inclusive product designed to meet them where they are. Second, by deploying this product digitally, members enjoyed an optimal way to access funds when they needed them. Third—and most importantly—GFA showed up for members when they needed it.
GFA lived the credit union mission of “people helping people” and leveraged a digital solution to make it happen day or night. Those members will remember who was there for them when they needed it the most—and that is the best way to make members for life.
Want to learn more about what Salus can do for your credit union and members? Contact James Chemplavil, founder/CEO of Salus, here.
