Hispanic Market Still 'Tremendous Opportunity' For CUs That Do It Right
ALEXANDRIA, Va. – Despite years of effort to reach the Hispanic community, credit unions still face a number of challenges—and opportunities—in this market, according to a panel put together by NCUA on this topic.
The panel featured Miriam De Dios, CEO of Coopera, a Des Moines, Iowa-based firm that provides solutions for credit unions on how to serve Hispanics; Sergio Osuna, supervisory examiner with NCUA's Region V office in Tempe, Ariz.; Maria Martinez, president and CEO of Border Federal Credit Union, Del Rio, Texas and Robert Peterson, president and CEO of One Source FCU, El Paso, Texas.
"Serving Hispanics is a tremendous opportunity because they are very young – the median age of Hispanics in America is 27," De Dios offered. "A large number of millennial Hispanics reside in the U.S."
Overall, De Dios said, one in two Hispanics in the country are unbanked or underbanked. Many of those folks use alternative providers such as check cashers. "This community is thirsty for financial services," she advised. "Many may not know what options are available. There is a compelling business case for credit unions to serve Hispanics."
At the same time, De Dios continued, it is important to realize not all Hispanics are alike. She said new immigrants are the most likely to be unbanked, but there also are second-, third- and fourth-generation (or more) residents – some of whom may not speak Spanish, or at least not exclusively.
The key, said De Dios, is all levels of the credit union must buy in to serving the Hispanic market.
"This might be a new concept for the board, especially in an area where a Hispanic population is growing, but is not the majority," she said. "Look at what drives people to alternative service providers – convenience and having Spanish-speaking clerks."
Among the tips De Dios and the other speakers provided to CUs interested in reaching out to Hispanics:
- Train the staff not only to speak Spanish, but understand the culture.
- Offer financial education classes in Spanish.
- Establish relationships with local Hispanic community groups – who can be sources of both new members and employees.
- Advertise on Spanish-language media, again for members and employees.
- Offer immigration loans and safe deposit boxes.
- Host focus groups and have an external Hispanic advisory group.
- For folks with little or no credit history, use alternative credit scoring methods.
Sergio Osuna, supervisory examiner with NCUA's Region V office in Tempe, Ariz., said while some worry about the regulatory difficulties involved in serving Hispanics, they have the same issues as any other group.
"New immigrants tend to live in well-defined areas, so credit unions can bring them in as an underserved area, often by census tract," he said. "But once an area is brought in to the field of membership, that does not mean everyone will come in the door – the credit union still has to do marketing."
Osuna touched on other frequently asked questions: a multiple-common-bond CU that adds a census tract does not automatically become a low-income credit union; and, NCUA's proposed FOM rule adjusts the current requirement to add a "service center" in an underserved area within two years to include an interactive Website.
As for identification: "Credit unions need to have proper procedures in place," Osuna said. "Many newer immigrants will not have a driver's license, but credit unions can accept a passport, a Matricula Consular – which is a document issued by the Mexican government, or an Individual Taxpayer Identification Number, or ITIN. Credit unions can apply to the IRS to issue ITINs, which would allow them to build trust."
Maria Martinez, president and CEO of Border Federal Credit Union, Del Rio, Texas, added it is very important to train staff how to accept various forms of ID.
Once trust is established, Martinez said, business can build exponentially. "Once you serve one person, Hispanics bring in their whole family. It is a cultural thing. If they feel comfortable they will bring their kids, their neighbors. Use tools to bring them in, such as income tax assistance. Also, Mother's Day is a really big deal in Mexico. Everyone buys a big present for mom, so offer loans."
Robert Peterson, president and CEO of One Source FCU, El Paso, Texas, noted 80% of his service area is Hispanic, and he sees many multi-generational families.
"Communication is the key to serving this market," Peterson said. "The whole organization needs to be ready. Products need to be seen as a continuum. You will assimilate some existing products for the Hispanic market and get rid of others. Be ready for anything. Listen and understand what people are looking for."
Added Martinez: "If you don't do it, someone else will grab them."
Peterson noted the Texas CU League – now part of the Cornerstone CUL with Oklahoma and Arkansas – started the Juntos Avanzamos (Spanish for "Together We Advance") program for Hispanic outreach. The program asks CUs to testify they have multi-lingual and multi-cultural employees and are ready to serve the Hispanic market.
"We recently opened up the Juntos Avanzamos program to other states, and it is spreading quickly," he said. "It is expanding past what we expected, which was the Border States. A credit union having the designation demonstrates to the Hispanic community the commitment credit unions have in serving them. Credit unions use Juntos Avanzamos to attract members."
Peterson noted a quinceanera – an often elaborate birthday party for a 15-year-old girl of Hispanic descent – is an opportunity for lending. "The first time I heard about someone spending $20,000 on a quinceanera, that got on my radar," he said with a laugh.