Credit unions can play a leading role in serving highly-educated Hispanics if they capitalize on four opportunities, according to new research report from Filene.
The report, based on research by George Washington University's Global Financial Literacy Center, is the third in Filene's financial capability series and uses data from 1,553 Hispanic respondents who reported "some college" or more as their highest level of education completed.
The respondents are part of a huge financial market: In 2015, Hispanics wielded a projected $1.5 trillion in purchasing power, and by 2050 they will number 133 million, the study said. But similar to Gen Y and baby boomers, Hispanics struggle with personal financial knowledge, with only 12% showing high financial literacy, according to the report.
Among highly-educated Hispanics, almost 80% have at least one credit card, though not all may be using them wisely, according to the study.
"Half of these cardholders report behaviors that can damage credit scores, increase interest rates and harm their future borrowing capacity," it added.
The report did not say what those behaviors were, but did add that nearly 40% of the respondents could be classified as "financially fragile."
"The results from the study highlight the need for credit unions to play a leading role in serving highly-educated Hispanics," the report said. "If these are the results for the highly educated, imagine the challenges of others. The data clearly indicate a strong disconnect between Hispanics and traditional financial institutions."
Credit unions should do these four things, the report said:
1. Increase engagement efforts with Hispanics through marketing and personal outreach. According to the survey, 35% of highly-educated Hispanics said they used one or more alternative financial services in the five years before the survey.
2. Offer less expensive products and services. Nearly 60% of highly-educated Hispanics said financial advisors are too expensive, according to the report.
3. Use more Spanish-speaking financial advisors. This will "help foster a culture of comfort and trust for potential Hispanic members," according to the report.
4. Encourage incentive-based savings programs to help build rainy day emergency funds. In the study, 22% of highly-educated Hispanics said they took loans or hardship withdrawals from their retirement accounts.
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