Fintechs powered 49% of personal loans in 2019. With the rise of Buy Now, Pay Later (BNPL) and Earned Wage Access (EWA), that number has certainly increased.
Unfortunately, many credit unions don’t believe these emerging market trends affect them. That will likely prove untrue.
Credit unions can (and should) provide installment loans to their members. It both meets member needs and grows credit union income.
Here’s what you can do with installment loans… and who’s providing them.
How Are CU Installment Loans Used?
For the purpose of this blog, we’re discussing personal installment loans. The industry—and the demand—has skyrocketed in the last few years.
But not all personal installment loans are alike. They can be used for different reasons, such as:
1. Buy Now, Pay Later (BNPL) Purchases
The growing popularity of BNPL is undeniable. Yet there are few fintechs that provide this capability to credit unions. Most of this emerging payment volume goes through direct competitors.
You can read more about BNPL providers for credit unions here.
2. Pay Down Credit Card Debt
Credit card debt can quickly overwhelm. But with personal installment loans, credit unions can give members better, more flexible repayment options.
For example, with Quilo, members can pay their balance in full or choose to pay an amount they’re comfortable with.
3. Replenish Low Accounts
Many Millennials and Gen Z avoid credit cards and traditional loans. Instead, they rely more on debit. Yet sometimes, large purchases can deplete checking accounts and put consumers in precarious positions.
This presents two opportunities. First, a personal installment loan to their account would give them a much-needed financial buffer. Second, it would help these “thin file” members build credit.
4. SMB Support
A good portion of installment lending occurs at the point of sale. Credit unions typically can’t provide SMBs with this capability, and competitors like Affirm and Klarna thrive here.
However, retailers, medical and dental offices, veterinarians and home service providers such as painters, roofers, plumbers, HVAC and other home improvement businesses may be more inclined to open an account with a credit union if they could offer instant financing.
What Quilo Brings to Credit Unions
Quilo is a digital lending platform that empowers credit unions to originate and service personal loans for members. It also helps SMBs offer financing at point of sale.
There are a few things that we love about Quilo and what they’re doing. For example:
- Quilo’s personal installment loans are flexible. Quilo addresses each use case listed above, including BNPL, credit card repayment, and account replenishment.
- Quilo is core agnostic. Integrating with many cores is good, but not needing the core at all is great. This should limit future IT headaches.
- Quilo is remarkably fast and easy to use. We tried it (several times). Each time, we breezed through the process in a minute, tops.
- Quilo extends to business account members. Quilo may help to acquire and support small business accounts by enabling to offer customers instant financing at point of sale.
Quilo has found a model that goes beyond BNPL to offer something more far-reaching. In a world of self-service and digital-first banking, that’s a welcome differentiator.
Additional Resources
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