Supporting Financial Institutions & Their Account Holders
For many financial institutions, introducing small-dollar loan programs is a cost-prohibitive process – not only operationally, but also from a staffing standpoint. From the costs of loan officers to additional slowdowns in account holder interactions in the branch, the reality is that it takes time and resources that many banks and credit unions simply do not have.
Facilitating Lender Compliance
Financial institution executives also need to be concerned with staying compliant with new and developing guidance in the lending regulatory arena. The CashPlease™ product is fully compliant with existing federal lending regulations, including the Military Lending Act. Velocity Solutions has already done the compliance legwork and continues to monitor the regulatory landscape for any adjustments that may be necessary in the future.
The Changing Regulatory Environment
The CashPlease™ solution is responsive to a changing regulatory environment and evolving bank and consumer needs. In October 2017, the CFPB issued a new rule that would dramatically restrict lenders’ ability to profit from high-interest, short-term loans. The rule has the potential to devastate the payday loan industry, while opening vast new opportunities for community banks and credit unions to offer low-risk and affordable small-dollar loans.
In reference to the rule, Richard Cordray stated: “We have no intention of disrupting lending by community banks and credit unions. They have found effective ways to make small-dollar loans that consumers are able to repay without high rates of failure.” (Consumer Financial Protection Bureau, Prepared Remarks of CFPB Director Richard Cordray on the Payday Rule Press Call, October 5, 2017).
We created CashPlease™ to support your institutions’ continued efforts to meet your account holders’ evolving needs; particularly the need for short-term liquidity.
Improving Consumers’ Financial Health
Millions of consumers frequently find themselves in need of access to short-term liquidity and often had no other option than to access cash from undesirable, high-cost sources such as payday loans.
Historically, 12 million Americans took out payday loans every year, spending $9 billion on loan fees (The Pew Charitable Trusts Press Release: “CFPB’s Proposed Payday Loan Rule Misses Historic Opportunity,” June 2016). The reason that many consumers rely on high-cost payday loans is because they lack the credit status required for more affordable sources of liquidity. Adding CashPlease™ as a white label product to your financial institution will provide consumers access to affordable credit without the need for a traditional credit check. An ability to repay determination is made by Velocity’s proprietary data-driven algorithm, the underlying technology of which has been used to analyze short-term liquidity on millions of accounts for many years.
Many consumers also struggle to pay their household bills on time, resulting in exorbitant late fees and negative impacts to their credit score. With the option to obtain a small-dollar, short-term loan from their trusted local bank or credit union, your account holders can avoid incurring pricey late fees, and may have the opportunity to strengthen their credit standing for future financial needs.
Further, the tough new restrictions placed on payday loans in October 2017 could reduce the aggregate annual credit extended to borrowers by way of payday loans by a staggering 80% (New York Times, “Payday Lending Faces Tough New Restrictions by Consumer Agency,” October 5, 2017) leaving cash-strapped consumers seeking new alternatives to quick liquidity.