Ben Morales, CEO
“Consumers in America do not save. We have no short term savings to help us when we run into situations that demand quick access to cash," opines Ben Morales, the CEO of QCash Financial— a Credit Union Service Organization (CUSO) that provides automated, cloud-based small-dollar lending technology for financial institutions. "It doesn't end with short term savings either; we see that long term or retirement savings and debts are also an issue. Many seem to have an odd perception that they would never retire, so they don't bother saving."
While these statements may seem a little harsh, it is the bitter truth. The U.S. Financial Health Pulse highlights that 17 percent of Americans are financially vulnerable, and 55 percent are financially "coping." It also states that over 81 percent of the entire American population experience some difficulties related to their finances.
The QCash Financial team had also noticed that consumers increasingly take loans—student loans to be specific—without even having a plan on how to repay them. This raises an issue for the banks as well. Financial institutions in the U.S. face losses in tune with millions due to unpaid loans and credit card payments.
"In a nutshell, the challenge lies in people's relationship with money. None of us were taught how to manage money in schools or while growing up. This has led to where we are today. We can all agree that financial literacy in the U.S. has failed," asserts Morales. QCash Financial is on a mission to solve this by using cognitive-behavioral therapy (CBT) in a way that enables financial services and banking companies to help customers gain more financial knowledge and build stability. "We wanted to leverage behavior change techniques to move a person toward better financial health," he says.
But, how is the staff at QCash Financial embedding the concepts of CBT into the world of banking?
Cognitive-behavioral therapy (CBT) is a type of psychotherapeutic treatment focused on helping patients identify and change thought patterns that have a negative influence on their behavior and emotions. It aids patients to develop personal coping strategies designed to help them take control of how they deal with "things" in their environment and improve their overall mental health. From treating insomnia to depression to even disorders like obesity and diabetes, CBT today is a technique that's predominant in the entire healthcare industry. Advanced technologies are helping move this therapy from the confinement of a doctor's office to innovative applications.
"Observing the diversity and increasing growth of CBT, we knew this technique could be successfully applied to the world of banking to create the lasting change needed to move a person toward better financial health," says Morales.
By combining CBT with over a decade of banking experience and technical expertise, QCash Financial has developed the first-of-its-kind QCash Financial Wellness App. It is an application that helps bank customers and credit union members achieve financial stability and resiliency through real-time behavior feedback, personalized learning, and one-on-one financial coaching.
The First Digital Financial Therapy Solution
Instead of overwhelming customers with loads of heavy-worded content, we offer engagements and create easy-to-understand content that is relevant to the end-user
The QCash Financial Wellness App is a white-labeled product that financial services institutions can offer directly to their customers as a standalone, mobile-only application to help them achieve financial wellness. "It is mobile-only for a reason. It's perhaps the only device that people carry around all day long. To change customers' behavior, we need to be able to reach them at any given point and allow them to be able to interact with a financial advisor whenever required," states Morales. Customers begin their journey by downloading the application on their phones, signing in, and setting a goal. With just a few clicks, users start receiving personalized financial content to educate them on saving money and paving the way to move them financially upstream. The magic here lies in what happens on the back-end of the software – using algorithmic formulas to personalize the user experience.
Typically, the QCash Financial implementation team takes 12-16 weeks to fully customize the software as per the financial services company's requirements. But the moment a financial institution goes live with the product, and customers start signing in, the application—which can easily integrate with the client's existing systems—begins to study the end-users' banking data, both historical and real-time. It understands their cash flow, how much they save, and at what point the person's checking account overdrafts. In doing so, the application gets an idea of the customers' behavior toward spending and saving money.
"Once we understand these aspects, our analytics engine creates a workflow with personalized content and engagements that are directed to customers through notifications and alerts. This encourages them to save more and spend less," says Morales.
Simple, Ready-to-Consume Content
"We understand the topic of financial services is hard to grasp. So why not simplify it?" asks Morales. The unique aspect of the content within the QCash Financial Wellness App is that it is simple, understandable, and ready-to-consume. Unlike other money management applications that are limited to just moving dollars from checking to savings accounts, QCash focuses on the customer's overall financial health and includes the human interaction with a connection to a financial advisor. Rather than forcing a customer to start saving by bombarding them with articles, the application educates them in a way that helps change their behavior and make "saving money" a habit rather than an obligation. The app also offers rewards when customers achieve a milestone that helps reinforce the idea of financial stability. "Instead of overwhelming customers with loads of heavy-worded content, we offer engagements and create easy-to-understand content that is relevant to the end-user," says Morales.
The content within the software is entirely based on the CBT framework.
It is delivered in a way that helps people become aware of what spurs negative, reflexive, or habitual thoughts and guides them to step outside of it slowly. In this case, the goal is to help users understand their spending habits and introduce them to the concept of saving money.
"We acknowledge the fact that many banks have their own financial literacy content which they have curated in-house or outsourced from third-party counselors. We allow them to integrate that content with our application as long as it follows our framework," says Morales.
In addition to educational materials, the QCash Financial Wellness App offers another distinct feature— a one-on-one live coach. Customers can reach out to the coach at any time; whenever they feel the need for a helping hand. These coaches are generally financial coaching experts from institutes or a third party consultancy. Users communicate via call or text within the application itself and seek guidance on various financial matters such as debt management or savings or any other topic where they need support.
"We want to leverage behavior change techniques to create the change needed to move a person toward better financial health"
Another interesting aspect of the application is that it gives customers quick access to small-dollar short term credit—up to $5000—in "six clicks and 60 seconds," says Morales. "The platform facilities the loan, but we leave it up to the banks to decide the specifics of their loan product—the loan amount, tenure, and interest rate," he explains. With such features, the application ensures customers learn the concept of saving money, while having access to liquidity opportunities if situations demand it. On the other hand, the software enables financial institutions to create more financial inclusion, enhance customer loyalty, target and sell their products, and keep its customers in a fully banked status—all of which helps the institution in becoming the go-to bank for the consumer. One of the most important takeaways for banks is that the application helps reduce their risks—in terms of giving and retrieving loans—which subsequently avoids heavy debt-related losses.
Building a Better Community with Financial Literacy
The QCash Financial Wellness App is a lot more than what meets the eye. Built on the five pillars that lead to financial health— borrow, spend, save, plan, and give—the application helps users develop capabilities and competencies in all aspects. "Our digital financial therapy app pulls all these aspects together and helps move consumers toward better financial health," states Morales. At the very moment, the firm is focusing on financial literacy, saving, and borrowing, but that's just the beginning. "In time, we will move into helping customers spend less, plan effectively, improve credit scores, and eventually, give back to the community. Only when people are financially stable will they be able to serve the society and make it stronger than it ever was," says Morales.
The company has already launched its first beta app and aims to commercially enter the market soon. For the initial release, QCash Financial will be going to market with this product as a standalone application. However, Morales says the app will eventually become part of the financial institution's banking app when they start noticing a behavioral change in the mass.