Emerge, in partnership with LogicFI, commits to launching a pilot program to help financial institutions successfully underwrite underbanked and/or subprime consumers utilizing LogicFI's proprietary underwriting, application, and servicing technology. By utilizing this technology with Emerge's bank and credit union partners, Emerge will help underbanked consumers get access to responsible, small-dollar loans and credit products through traditional and regulated financial institutions thus reducing consumer's dependence on predatory lending products.
This commitment will enable financial institutions to use LogicFI's technology to better underwrite small-dollar loans and offer responsible credit products to underbanked consumers. LogicFI's technology provides financial institutions with an easily scalable and turnkey solution that allows for a consumer to apply online via a responsive application, store and sign legal agreements, along with a fully automated underwriting and decisioning platform that provides consumers with an instant decision. Emerge and LogicFI will work with banks and credit unions to provide this technology at a significantly reduced underwriting cost for partnering financial institutions, while providing a secure and instant credit decision for customers.
Loans made through the program will comply with the small-dollar guidelines set forth by the FDIC, Center for Responsible Lending and the National Consumer Law Center.
Emerge will also provide a comprehensive Financial Wellness Program to its customers, including online financial education wellness products and services, such as video, online courses, personalized email campaigns, daily text message tips, and telephonic and webinar access to expert financial counselors.
Over the next year, Emerge will utilize its relationships with banks and credit unions to provide this technology to at least ten financial institutions with the goal of providing 10,000 socially responsible small-dollar personal loans, ranging from to ,500, to individual consumers by June 30th, 2016.
Quarter 4, 2014 - Quarter 1, 2015:
Emerge has already been working with several nonprofits, foundations, and financial institutions to offer its expertise along with LogicFI's technology platform and underwriting solution. Emerge will be utilizing its relationships and networks to identify and onboard additional financial institution pilot program partners. The goal of Q4 2014 and Q1 2015 is to onboard up to ten new but strategic financial institution partners or nonprofits. The average onboarding and setup period for a new partner can take four to eight weeks depending on the requirements, complexity, and solutions needed by the financial institution.
Quarter 2 - 4, 2015:
Emerge and LogicFI will continue to bring on new potential partners as well as optimize and test current partners. The goal for Q2 to Q4 will be to assist partners in growing loan volume as well as the reach and scope of this commitment to consumers nationwide.
Beyond the pilot:
Emerge and LogicFI will continue to improve and scale this program nationally.
76 percent of working Americans live paycheck to paycheck; 56 percent have credit scores that are subprime (credit scores less than 700 FICO). By utilizing cutting-edge technology and unique partnerships with banks and credit unions, Emerge has been able to successfully refer half of these subprime borrowers to new banking relationships and products, helping them avoid predatory lending alternatives all the while providing innovative and industry-leading financial education.
However, due to risk, regulatory restrictions, antiquated technology, and underwriting practices as well as lack of experience in working with/underwriting sub-prime customers, banks are currently rejecting the majority of these applicants. Many of these customers turn to predatory loan products as the only means available to assist in financial emergencies.
Through an alliance partnership with LogicFI, which provides technology and underwriting solutions enabling banks to successfully provide credit to underbanked or sub-prime customers, Emerge is able to help match consumers get access to affordable and responsible small-dollar loans and credit products through its bank and credit union partners.
Emerge is seeking implementing partners, such as financial institutions and nonprofit partners who are interested in, or in the process of, offering responsible small-dollar financial products. Additionally, the company is seeking financial resources to help cover the cost of said programs for nonprofit partners.
Emerge can provide best practices, underwriting, financial education and small-dollar lending expertise, and technology solutions for organizations interested in offering a responsible small-dollar product or similar financial solution. The data and feedback resulting from this initiative will be made available to the CGI Financial Opportunity cohort. Initial data results will be presented to the CGI cohort in 2015 and the company will offer opportunities for other members to partner in this initiative or use findings to streamline their own financial education or underwriting.