Credit Unions Need the Tools to Serve a Burgeoning Hispanic Market

This year, more than $15 billion will be sent (or “remitted”) by persons in the United States to their families and friends outside of the U.S. in countries such as Mexico, El Salvador, Guatemala, Honduras and Nicaragua. Typically, persons who make up the large and growing immigrant populations in the United States from these parts of the world are transferring the funds. Those folks tend to be young immigrants who have relatively little education compared to the rest of the U.S. population, and who are employed predominately as laborers for low wages. Nevertheless, the individuals making the remittances exhibit an intense loyalty and obligation to their families and friends back home. As the Pew Hispanic Center wrote in its study late last year of remittances and remitters, the sums sent are “the monetary expression of a profound human bond between people who come to the United States to work for long hours at low wages and the families they left behind.” Sound like credit union members? To CUNA, they do indeed. In fact, these individuals – recent immigrants – are just one part of the burgeoning Hispanic market in the United States. Along with the other parts of the market (long-term immigrants, and of course, those of Hispanic heritage who for scores of years have contributed to rich culture and diversity of our nation), they make up the largest ethnic/minority group in our nation – 13.3%. Most importantly, this entire market is one that credit unions can and should be serving with great enthusiasm. CUNA, in fact, is working in a number of ways to help credit unions do just that. CUNA has recently entered into an agreement with the World Council of Credit Unions (WOCCU) and Travelex to make remittance services more broadly available to credit unions and their members. The new program, which retains the name IRnet (first used by WOCCU), gives credit unions the option of using Travelex’ Worldwide Money Remittance system, or the Vigo Remittance system. The program means that U.S. credit unions can provide international money remittances to their members and potential members more efficiently, and more economically, than can other financial service providers. Using the IRnet system, credit union members can send up to $1,000 instantaneously to Mexico for just $10. Additionally, IRnet does not charge foreign recipients any fee for accepting transfers – a significant point in an industry that typically charges fees on both sides of the exchange. Many credit unions are already providing remittance services through IRnet, and CUNA’s new arrangement will help even more offer this service to a growing part of the consumer make-up of our country. Yet, CUNA wants credit unions to be able to do even more – such as allowing credit unions to provide remittance services (and others) to non-members within the field of membership. Along those lines, CUNA is strongly supporting pending legislation before the U.S. House of Representatives (H.R. 1375), the “Financial Services Regulatory Relief Act”) which provides credit unions the authority to cash checks and provide remittance services for non-members in the field of membership. Having this authority would further enhance the capacity of credit unions to reach the “unbanked” and the “underserved,” while providing an affordable and financially sound alternative to high-cost payday lenders. Further, this authority would give credit unions an even more beneficial tool in combating predatory lending practices. This is an especially remarkable point for credit unions: Many remittance senders take a skeptical view of financial institutions in general. By getting these “unbanked” individuals through the door, credit unions can (and will) earn their trust, respect, and loyalty so that they will consider becoming full-fledged members. Just as so many other hard working Americans have done over the last century. Beyond the immediate needs of recent- and long-term immigrants to help their families back home, CUNA is also working to help credit unions help themselves better serve Hispanics within their memberships. This follows a path blazed by a number of state Leagues, which have been instituting a number of innovative programs to serve Hispanic communities in their states. On Oct. 1, CUNA unveils a new resource for credit unions: “Credit Unions Serving Hispanics: A National Perspective.” This eight-section, 100-page manual offers a complete view of the Hispanic market for credit unions. It includes suggestions on why credit unions should serve the market, how to serve the market (including how to develop services), tips on promoting credit union services, and what credit union rivals and competitors are already doing. For example, the manual points out that nearly half of the Hispanic community is without financial services, despite the fact that Latinos will soon have more than $600 billion in purchasing power. Further, the manual reveals the percentage of Hispanics without financial services is twice that of the population as a whole, even though more than 80 percent in a recent survey of Hispanics said they wish they had more information about saving and investing. Further, 88 percent said that they wish more financial institutions offered products and services with Latinos in mind. The most important need expressed by Hispanics, however, is to have a welcoming environment – particularly information in Spanish. The manual provides examples, suggestions, and advice for producing those materials for Hispanic members – in Spanish. It also provides guidance from other credit unions that have traditionally served Hispanic members, or have successfully entered the market. In short, the manual provides credit unions the building blocks for serving this important, growing market for credit unions – a market is almost perfect for credit union service. Finally, CUNA is taking additional steps within its own organization to serve Hispanics directly. We have just begun plans to create a Hispanic Web site within the consumer section of CUNA’s Web site, www.cuna.org. The entire text and focus will be on serving Hispanics, particularly with an eye toward the services Hispanics need the most (and, yes, it will be entirely in Spanish). The Hispanic market is a burgeoning one. New residents in our country should be encouraged to use safe, sound financial institutions (like credit unions) that focus on service to them. Other members of the Hispanic community should be looking to credit unions as the financial institutions they can trust and use effectively. CUNA is working to put in place the tools and skills to serve this market, and to build trust with this valued group of Americans.