The sheer size and rapid growth of the U.S. Hispanic population has rightfully grabbed the attention of every major industry in the U.S.
For credit unions, this critical market represents unprecedented opportunity for growth. Competition for the loyalty of the largely underserved Hispanic consumer is heating up, and many credit unions are right now deploying strategies to attract and serve the youngest, fastest-growing demographic in the country.
Today, one in six U.S. residents is Hispanic. By 2050, it will be one in three. Given the high turnout of Hispanic voters during the 2012 presidential election and recent proposed legislation to improve immigrant Hispanics' path to citizenship, it seems as though recent media coverage of the national importance of the Hispanic community has accelerated almost fast as the growth of the population.
To credit unions in places such as California, Texas and New York, this isn't new information. But to credit unions in the Midwest, the rapid shift in the cultural makeup of their states is creating a strong need for quick strategy. In the small town of Ottumwa, Iowa, for instance, the Hispanic population has grown from a mere 200 people in 1980 to now accounting for more than 11% of the town's 25,000 residents. The fast growth of Hispanics in unlikely U.S. towns recently caught the attention of national media. A Today Show news segment featured the increased diversity of Ottumwa, Iowa, as an example of what's happening all across the U.S.
$1 Trillion In Power
While it's true the Hispanic market is disproportionately underserved, the purchasing power of U.S. Hispanics exceeds one-trillion dollars. What's more, the median age of U.S. Hispanics is 27. This represents an incredible opportunity for credit unions looking to grow while also decreasing the average age of their memberships.
Hispanics are young, and today their financial needs are largely met by alternative (and often expensive) financial service providers, like check-cashers, wire-transfer services and rent-to-own shops. With a "people helping people" philosophy at the core of every credit union's mission, it becomes clear that culturally relevant and fairly priced service to this market is not only a smart growth strategy; it's the right thing to do. The natural community involvement, consumer-friendly products and financial literacy programs offered by the nation's credit unions make them an ideal fit for Hispanics, many of whom may mistrust the traditional U.S. financial system.
What Can You Do?
How can your credit union begin to serve the critical Hispanic marketplace? Targeting an entirely new market, particularly an emerging market, isn't going to happen overnight. Experts at Coopera, a Hispanic market solutions firm, will tell you that to be successful in attracting and retaining Hispanic members, it takes the right organizational culture and a solid operational foundation of adaptation.
Too many businesses have expected Hispanics to adapt to their existing products rather than adjust those products to meet the cultural nuances and unique needs of the Hispanic consumer. Without understanding the special circumstances of the local Hispanic community, it will be difficult (if not impossible) to make the kind of strategic headway credit union leadership may want to make.
Credit unions adapting to the Hispanic market will encounter challenges, just like any business would when targeting a new consumer segment. These challenges often begin with the cultural disposition of a credit union's board of directors, management teams and staff. Only with an appreciation of the Hispanic market's importance to growth can teams begin to make Hispanic membership strategies a priority for their credit union.
Overcoming The Challenge
Many successful credit unions have overcome challenges in their Hispanic growth journey. In fact, with the guidance of experts like those at Coopera, credit unions have successfully trained their boards and staff, studied the local Hispanic market and begun to achieve significant milestones in their Hispanic-growth strategies.
Because serving Hispanics isn't a fly-by-night operation, the sooner you start on this journey, the farther ahead your credit union will be. Companies across the U.S. (including new entrants to the financial services industry) have realized what many credit unions are only now realizing - that they need to adapt to the needs of Hispanic consumers quickly to obtain that first-mover advantage in the marketplace. Those who take a wait-and-see approach before entering the market will find themselves dealing with many more barriers to entry once the competition has fully ramped up and word has begun to spread among the tight-knit Hispanic community.
Hispanics are a credit union's largest opportunity for growth, and there's no better time than the present to strategically position your credit union for service to this critical market.
The author is president of the Iowa Credit Union League.