Alternative lending. It’s not a term many have heard or even used, but Tim Latimer prefers it (and to be honest, may have even coined it).
As the CEO of Cashco Financial, Latimer is frustrated with the negative perceptions. The industry has been accused of loan sharking and being predatory, has been slapped with regulations, and has struggled with public misinformation for years. Now, after a successful a partnership with ATB, Cashco is adding a new mission to its relentless drive to offer meaningful banking that provides “relief for today and hope for tomorrow.” That mission? To spread the word about how alternative banking makes a difference.
Cashco is the financial institution that fills the gap for those that don’t qualify for conventional loans. This is a passion for Latimer because he has walked many, many miles in his clients’ shoes.
“I grew up without any money,” he says bluntly. “It was the ‘where is my next meal coming from’ type of poor. What I knew early on was that I didn’t want to be poor. After I wasn’t poor anymore, I realized I wanted more. Not more money, but to make a real difference in the lives of others.
“Because I grew up broke, I have a lot of empathy for people who are struggling. With one or two decisions, anyone can be on either side of the income gap.”
In his early 20s, Latimer got into the pawn business because he saw a desperate need in the community to have fast access to small loans. I also started the buy-here-pay-here car business in Edmonton by taking a small down payment and allowing 10-month installments. I was good at that business of serving the working poor, but it’s a tough industry. I would say I was a… character.
“The day I started offering payday loans without clients leaving a television, car, or other possession as collateral, people lined up at the door. I made some money, but I wanted something more.”
In his early 30s, Latimer decided to make some changes.
“I worked hard on my life’s purpose and wrote a mission statement about who I was and what I wanted to do. That process changed my life from ‘being a character’ to ‘developing character.’ Now I’m doing the same as a businessman. I’m working hard to create a different kind of bank and improve the lives of others.”
He says decisively, “I help people in need. Most people misunderstand the business. They misunderstand alternative banking. In pawning, when people leave something with you, that’s the deposit, and the successful broker tells clients not to take more than they need.”
Latimer is not blind to the problems that have always plagued the industry, such as the practice of rolling over loans, which he says creates an “unfortunate need” for the clients and the business.
“Our purpose of ‘relief for today, hope for tomorrow’ is all about helping people move back to conventional credit,” Latimer says firmly. “The relief for today, that’s the easy part. That’s a loan. The hope for tomorrow is what is more compelling. We are not trying to trap people. We know life is life and that things come up. People say if they can just get rid of businesses like us society would be better off, but there is a need out there.” Without us the need does not go away.
The need is for those that need money now for food, shelter, and transportation. While a conventional bank that gives an employed person quick access to enough credit to bury them in debt for life is not frowned upon, giving a disenfranchised person a loan for food somehow carries a stigma.
So, how is Cashco tackling the need and the negative perceptions? They are giving away meaningful banking.
Clients have an option among three types of meaningful accounts, and all three have zero fees. The Everyday Use account comes with a $500.00 overdraft and pays $0.25 up to $5.00 per month for each transaction. Jumpstart Savings deposits the first $10.00 on the house and allows unlimited deposits without service fees. Mom Matched Savings matches a mom’s first $10.00 of savings for every month.
“Do that 12 times and you have $120.00. and with the matching that turns into $240.00 for Christmas,” Latimer says.
The structures of the accounts are not by accident.
“Here’s how it works for the underbanked in Canada,” Latimer says with obvious frustration. “You try to deposit a cheque and the bank says, ‘We don’t trust you, so we will hold this for 10 days.’ Our clients often have low balances in their accounts. One mom came to me saying ‘I had just $8.00 and went to the bank to withdraw it to buy meat and milk for the family – it wasn’t there. They had charged a $12.00 bank fee and overdrawn me, and I had to pay $45.00 in fees!’ That’s punitive banking! The $500.00 overdraft on the Everyday Use account is designed to combat that. Sometimes, there has to be a little wiggle room. Meaningful banking means everyone gets an overdraft regardless of their credit rating.”
Cashco also offers flex loans of up to $7,000.00 with the aim of helping establish/re-establish the client’s Canadian credit score and consolidate other debts. There is no penalty for paying out the loan early, and the amount and terms of the loan are flexible enough to meet each client’s needs.
However, it’s not just the accounts that Cashco uses to help the disenfranchised get back on their feet. Under Latimer’s leadership, the company has become “best practice junkies.”
The CEO continues, “In 2012, we asked ourselves what our Big Hairy Audacious Goal (BHAG) should look like, and we challenged ourselves to be globally recognized as ‘another kind of bank’ by 2025. My job was to call banks and get them to agree to make us a white-label bank account.
“I called banks and explained how I thought meaningful banking could make a difference and asked for their help. I’d get put on hold. I imagined they were calling out, ‘There’s a predatory on line two! Anyone want to help?’ I wasn’t getting anywhere. So, I tried innovating debit cards to behave like a meaningful account. It didn’t work either. As we worked through the process (and were getting turned down), it happened. We voted in the NDP, and they decided to shut down payday lending.”
Latimer points out that to their “credit,” the NDP did an academic study and hired a researcher to write a report to support their position. She spoke with Latimer, toured several locations, and was both surprised by the reality of the need for the product and impressed by the service and attitude provided to the clients. Because of her findings the final paper was sympathetic to the purpose of the industry and recommended a cautious approach to regulations and sanctions, and to stop calling them names. However, the paper was quietly tucked aside, and the hammer came down on the industry.
“The NDP enacted their new legislation and called it An Act To End Predatory Lending. They put it out there in big type letters.” Latimer sighs, then says a bit cheekily, “We are not calling them names…”.
Now, Cashco’s position was more precarious than ever, but Latimer was not about to give up. With the early days of his struggle to survive financially always top of mind, he reached out to the last place anyone expected: a crown corporation.
ATB is not a charter bank. It is incorporated under the ATB Financial Act and is regulated by the Alberta Superintendent of Financial Institutions. Contacting ATB was a risky move, but Latimer points out, “I heard Dave Mowat [former president and CEO] would respond to anyone that wrote to him, and their mandate is to serve every Albertan. Their slogan is about listening. I wrote to Mowat and challenged him to serve the Albertans struggling on the lower rungs of the credit ladder. He wrote back and said he would send someone to see us.”
The rest is history. The representative, came, saw, and ATB swung into action.
“That’s what made it work with ATB,” Latimer says with pride. “They came alongside because of our sense of purpose and how it worked with their own 94-word mission that banking can make a difference. They said, ‘Tell us what you want in a white-label account and a savings account. They gave us a code name called Firecracker, and they didn’t tell anyone besides the team about it for a year while they created the bank account, software, and support. Now we have an account with ATB and it’s like nothing else in North America. We have this amazing thing we started.”
Finally, Latimer and Cashco were headed to where they wanted to be, not only operationally, but also in the public perception; but he’s not anywhere near finished. Latimer is a man on a mission.
“Canadians have the mentality of ‘I deserve it. I need it.’ The banks used to lecture people and say, ‘you deserve it when you can afford to pay for it.’ But the banks are not lecturing anymore. Financial institutions have turned into lenders instead of vehicles for savings. Research says that’s what has derailed society and put many on a path of debt that is very hard to get out of. What we really, really need is to bring back meaningful banking to the underbanked, the poor, and the working poor.
“How do we bring community circles back and get people talking openly about money, spending, and saving? How do parents come up with money to pay for school bills, stretch the food budget, etc.? This is the information about money that needs to be shared. I would love to come up with capital to research how to get those conversations flowing. We started something now, but how do we go even further?
“We need to be bigger. The NDP government devastated our sector. They took us down drastically in four months, and they were not gentle about it at all. They came at us as hard as they could and yet the need of the people is still great. We think there is a better fix for this sector. We know there is an appropriate time to issue and use a loan. We know that offering too much of a loan is actually a disservice.
“Going forward, we want to build a bigger suite of real-world banking services, like a credit card with a low sum ($500) to help rebuild credit, or by promoting RESPs to those who are not connected to one. We want to raise more capital so we can offer the types of services that are needed. I’d love for us to finish building out a suite of services for the unbanked, the disrespected, the near-poor and the working poor.”
Cashco doesn’t have any service awards to speak of. Their storefronts are tucked into strip malls and are not in the poshest parts of town. The are located where they are needed. Latimer and his team, who span 59 branches across Canada, get up every morning, greet clients as they are, and offer the biggest possible helping of respect and non-judgement alongside customized banking solutions. They do this with no expectation of industry recognition.
“If we want the industry to reach the next level, we have to share what we’ve learned and invite in competition so they can take advantage of our learning.,” Latimer says wryly. “We are not big enough for that yet, but we don’t have much time. They are watching.”
Most entrepreneurs have an eye on aggressively crushing the competition, but Latimer welcomes it. The more the merrier because, as more alternative bankers set up shop, more of Canada’s underbanked can work their way back to stability with no-fee daily accounts and savings accounts that actively encourage long-term savings.
He’s a bit tired. Latimer has been fighting hard all his life. He fought his way out of poverty. He fought his way into the pawn and buy-here car business when those concepts were fledgling in Alberta. He’s fought for his concept in the courtroom, and he fought the NDP. Today, he fights the perception of “predatory lender” and he fights hard for the underbanked and the disenfranchised. For anyone else, the years of constantly battling uphill would wear them down and make them bitter, but it hasn’t worn down the CEO of Cashco.
“I wish on everyone three things,” he smiles with the steadiness of a man that has come to terms with the perceptions and knows he will overcome them all. “I wish for all gratitude, humbleness, and selflessness. When you mix those together, they bring such joy.”
And with that, he squares his shoulders, takes a deep breath, and opens the door to provide another day of opportunities for those that need them the most.