Credit Unions Have to Be in it for the Long Haul When it Comes to Hispanic Outreach

MADISON, Wis. – Credit unions need to plan to serve Hispanic members over the long haul and recognize that that their needs will change over time. That is one of the conclusions suggested by La Oportunidad, a new report from the Filene Research Institute. La Oportunidad means The Opportunity in Spanish. Graphics which accompany the announcement of the report depict how first generation immigrants’ financial needs revolve primarily around transactional and remittance services but how, by the third generation the immigrants will need investment and retirement advice as part of their financial services. The biggest change may be in language, where the study forecasts that most new immigrants will be dependent on their native languages for communication with the CU, but that their grandchildren will use English in the relationship. In many ways the report, written by Filene Research Director George Hofheimer, repeats information which has been presented before. Hispanics in the U.S. represent a large (40 million) and rapidly growing (150% since 1980) population in the U.S., according to the U.S. Census Bureau’s 2004 estimates. At the same time, it is a population which remains largely underserved in financial services. For example, Hispanics lag almost every other U.S. minority group in the percentage of their population (40%) which have an account at a financial institution. But the report breaks some new ground in that it explicitly identifies Hispanic financial objectives which do not relate directly to remittance or other transaction services. Hispanic households dream of owning homes, owning new cars, obtaining higher education and starting small businesses. “An automobile is also a desired purchase for Hispanics of all generations, the report said. “While immigrant and unauthorized migrant Hispanics tend to purchase used cars, Hispanics accounted for eight percent of new vehicle purchases in the U.S., according to J.D. Power and Associates’ 2002 Automotive Segment Report. The 2002 figures make Hispanics the largest minority group of new car buyers, the firm notes, predicting that the Hispanic segment will rise to 13 percent by 2020.” The report also found that even after many Hispanics establish relationships with banks or credit unions, they tend to remain fiscally conservative and stay away from taking out too much credit, particularly credit cards, in favor of taking savings products like depository accounts or certificates. They also save much more. According to the report, 33% of Hispanics actively save money compared to only 1% of non-Hispanics. But in order to reach and serve Hispanic members, the report said a CU would have to do more than hire some bilingual tellers and offer remittance services. It noted a survey by Allstate found that 40% of Hispanics interviewed said that they felt ignored by financial institutions because they do not understand the benefits of having a bank relationship, they believe the banking process is too complicated, they fear that illegal status prohibits them from opening a bank account, or they worry that there are minimum deposit requirements they cannot meet. “As service industry and agricultural workers, many Hispanics’ work and banking hours are different than traditional hours,” the report said. “To serve them, credit unions need to be accessible when Hispanics want to cash checks, send remittances and conduct business-often in the evenings and on weekends. Any Hispanic community grocery store is packed on a Friday night, operating as much as a community center and check cashing outlet as a grocery store.” The report then walks through different ways credit unions can reach out to different generations of Hispanics and offer different products and services to appeal to them, all while noting that banks have already begun to do the same thing. Merrill Lynch has added more than 350 Hispanic American financial advisors to its staff, the report said. JP Morgan has stepped up its efforts to tap into the Hispanic market by building 100 mortgage offices specifically near underserved Hispanic areas. Allstate, Liberty Mutual, and Farmers Insurance Group are among insurance providers targeting Hispanic markets with new bilingual offices as well. Wells Fargo Bank is leading the way with its popular money transfer accounts and the acceptance of identification cards. Employees in its Los Angeles, San Diego and Phoenix branches are bilingual. The bank also aims to seize the large Hispanic business market with its Latino Business Services loan program. Although only established in 1997, the LBS has already brought in more than $1.5 billion in Hispanic business loans to Wells Fargo, the report said. [email protected]