FARMERS BRANCH, Texas - What is a credit union? Is it not the same as a bank? The Texas Credit Union League launched a series of focus groups in March of this year not only to gauge awareness among Hispanics about credit unions, but also to probe their perceptions of the U.S. banking system. The findings: less than half of first-generation Hispanics know the difference between banks and credit unions. TCUL and its partner, Texas Appleseed, a non-profit organization that leverages attorney pro bono resources to support broad social change initiatives benefiting low-income communities, teamed up with local Hispanic organizations to conduct focus groups for first-generation Hispanics in six target markets: Dallas, Fort Worth, Austin, Houston, El Paso and Rio Grande City. The majority of the 63 participants (79.4%) were born in Mexico. According to the report, "Qualitative Study of the Banking Experiences of Latino Immigrants in Texas" prepared by Rincon & Associates, more than half of focus group participants said they use nontraditional financial services providers such as supermarkets and check-cashing agencies, in part because financial institution fees are too high or their services are inconvenient. Of those that do have an account, 38% said it is with a bank and only 4.8% use a credit union. Other reasons cited for not having a bank/credit union account included mistrust of the U.S. banking system, non-acceptance of the matricula - a form of identification issued by Mexican consulate offices in the U.S. - fear of exposing their immigration status and lack of information provided in Spanish. Saving for the future? Most feel the instability of their economic status leaves little money to budget and save. The most common practice among focus group participants is to spend money earned immediately on basic needs, such as food and housing. TCUL Communications Director Linda Webb- Maon said many of the focus group participants believe it is actually cheaper to use check cashers and payday lenders. "The very financial service providers we are trying to steer them away from, are the ones they are turning to for their financial service needs," Maon said. "Clearly such providers are filling an immediate need. However, we strongly believe that in order for them to build financial wealth, a relationship with a financial institution that is working for their best interest is essential. Without this, we believe their quest for the American Dream will be difficult." Hispanics generally hold positive views of U.S. financial institutions, but 52.4% of the respondents were unfamiliar with credit unions. Also unknown to a majority of the participants was the Spanish translation "cooperatives de credito," highlighting a need for credit unions to evaluate what term they use in marketing credit unions to Hispanics. Latinos who used banks or credit unions most often take advantage of savings and checking accounts, credit cards, and ATMs. Although most of the Latinos indicated they had access to limited credit, department store credit is the most used form of credit. Credit from financial institutions is used less frequently to purchase cars or to finance home-related expenses. While 57.1% of the participants indicated it was "very important" for banks and credit unions to support money transfers and direct deposits to bank accounts in Mexico, only 1.6% of the respondents currently use a credit union for that task, suggesting a need for greater marketing of these services on the part of credit unions. The majority of respondents rely on private services like Western Union. Maon pointed out that while focus group participants might lack financial knowledge (only two of the 63 study participants had ever received financial instruction), the majority - 85.7% - expressed interest in learning more about money management. Topics of interest included how to organize finances within a budget; how to manage a savings/checking account; how to build credit; and understanding the home buying process. Texas Appleseed became involved in this initiative through their connection with Community Resource Group, a non-profit community development organization that has worked with low income Hispanics in the "colonias" along the Texas-Mexico border. Together, they studied the remittance market, looking for ways to expand immigrants' access to financial institutions. "As we helped colonia residents build assets by providing home improvement loans and titling assistance, we recognized the need to help them obtain affordable, safe financial services," said Rebecca Lightsey, CRG Colonia Program Director. "The Appleseed/CRG goal in carrying out the focus groups was to identify opportunities and document barriers to mainstream financial institution participation of lower income Hispanic immigrants in Texas. We see moving the unbanked Hispanic community into the financial mainstream as a win-win situation. With Texas-specific data, financial institutions will be better able to serve this growing population," she said. "We are excited to collaborate with the Texas Credit Union League on this project and hope that the information will serve as a catalyst to increase the number of Texas credit unions focused on serving the Hispanic immigrant population, as well as their capacity to do so effectively." The study flagged several areas for improvement by credit unions: acceptance of the matricula and a move away from asking for documentation related to legal status; making loan standards more flexible - consideration of "no credit" versus "bad credit;" better explanation of fees; and creation of a friendlier environment. Just because a financial institution has bilingual employees does not ensure those employees are making inroads with the Hispanic community. Latinos in three of the six markets noted that they had been discriminated against by Hispanic employees of financial institutions who, even though they had the skills, were reluctant to communicate in Spanish or who treated them less favorably than non-Latino customers because of how they looked. Empowered with this information, Maon hopes Texas credit unions will have a greater understanding of the needs of the Hispanic market, and be in a better position to serve this largely underserved segment of the population. Practical application of the focus group findings might translate into such modifications in credit union services as: offering free checking, providing means of accessing money in U.S. accounts by relatives in Mexico, providing weekend services, or pushing to ensure that effective bilingual/cultural services are in place within credit unions. The focus groups are one component of a much broader Hispanic outreach program funded by TCUL, the Texas Credit Union Foundation, the National Credit Union Foundation, Texas Appleseed and Vigo Remittance Corporation. -

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