Why I think Kinecta FCU is Brilliant
First, for those of you who haven’t heard - Kinecta is in the check cashing business.
About a week and a half ago, they bought Nix Check Cashing. Nix holds about 55 locations throughout Southern California. They serve the under-served as most check cashing places do.
Now, I am not a huge fan of check cashing places. They serve their purpose I suppose, but at an incredible expense to the folks who use them. They are also susceptible to fraud so their rates are incredibly high. In a perfect world, all these people would just join their credit union. Well Kinecta made this easier by making the first move.
Now, why this is more brilliant than what you see on the surface. You need to know who uses check cashing places. Here where we are it is mostly low-income Hispanic/Latino and Asian folks that use these places. The reason being is that these two cultures are very cash oriented. Or in other words - they don’t trust banks.
The other thing you might notice in check cashing locations are the lines. Every Friday there are long lines. These are folks that buy money orders to send money to their families, cash their paychecks or get an advance for next week. But this takes time. So you have a captive audience for cross promotion of credit union services.
So, Kinecta has captured tens of thousands of members in a single sweep. These are members that may not trust banks, but may come to trust Kinecta through the existing relationships with Nix. These folks will tell their frinds and family about Kinecta and on and on. Nix is already profitable, so it won’t be a financial drain for the credit union (other than the acquisition expense). Over time, these check cashing locations will likely become “Mini-Branches” further providing brand awareness for Kinecta and allowing them to expand their FOM.
So, Kinecta has bought itself a huge member base and a profitable business that will help keep their rates competitive for their members. They specifically targeted and acquired a huge base of Hispanic/Latino member and Asian members. They have expanded their FOM and have increased capital to keep their rates and fees competitive. All while educating more and more people on what credit unions do for the individual. At the least, Nix may become known as the Check Cashing Place with a Heart.
Congrats and good luck Kinecta. Keep up the good work!
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[...] I think Kinecta is right and I think Trey is right. I think really making this a financial service and explain why a holiday loan is superior is one good approach. I think that auto enrolling people into a savings vehicle that sign up for one of these short term loans is a good idea. I think anything that will stop people from getting sucked into the “Payday Loan Black Hole” is a great idea. [...]
[...] a trend against the norm such as an investment into a market when others are pulling out (like when Kinecta bought Nix Check Cashing)? In essence, what’s your [...]