DES MOINES, Iowa—The U.S. Hispanic market, with more than $1 trillion in buying power, represents a large growth opportunity for credit unions.
But the community won't successfully reach out to this fast-growing, underserved segment by targeting Hispanics as one homogenous group.
A leading expert on the Hispanic market, Miriam De Dios, CEO of Coopera, a subsidiary of the Iowa CU League, cautioned that credit unions and other financial institutons must gain a sound understanding the Hispanic communities they serve. "It's not just enough to begin marketing to this community, you have to understand who this community is," De Dios said.
She emphasized that credit unions must create a comprehensive plan that targets the unique segments within its own Hispanic market-delivering the service and products needed by each.
"The Hispanic community is very diverse," said De Dios to attendees during a recent webinar hosted by The Members Group. "It's not one big, monolithic market. There are multiple segments with very different characteristics and needs. You need to carefully examine your business base, define the opportunity and set your goals."
Hispanics are the fastest-growing, youngest and most underserved market in the United States, said De Dios, pointing out that one in six U.S. residents is Hispanic, and that by 2050, it will be one in three. The median age of U.S Hispanics is 27.
De Dios divided the Hispanic community into three key market segments: Gen Y and second-generation Hispanics, small Hispanic-owned businesses and Hispanic consumers without traditional banking relationships. De Dios described the characteristics of each.
The Financially Excluded
The typical "financially excluded" Hispanic consumer is in their 30s, saves money for purchases, uses cash a great deal, needs a loan and is wary of credit cards. Products needed are interest-bearing accounts for savings, a credit-building loan, a prepaid reloadable card, money transfer services and an auto loan. "This segment really uses auto loans," said De Dios.
The typical young Hispanic adult is saving for a car, likes credit cards to build credit and is tech savvy, said De Dios. Products this group needs are a checkless checking account, remote deposit capture, mobile and online banking, a credit-building loan or credit card, a prepaid reloadable card and an auto loan.
De Dios pointed out that Hispanic entrepreneurs are opening twice as many businesses as the national average, and their numbers have grown from 1.7 million in 2002 to 3.2 million in 2013. "There are some typical obstacles faced by these business owners. They need access to capital, lack management and leadership skills and need business relationships."
Often, this group uses credit cards for their business loans and debt has built up as a result-and they don't know how to rebuild credit. Products needed are a small business loan, business services such as payroll cards, prepaid reloadable cards, a retirement account and credit repair assistance.
De Dios acknowledged that what sometimes "paralyzes" financial institutions in their efforts to serve the Hispanic market are misconceptions that the effort is too daunting, that Hispanics present too much risk, and that the FI does not have the resources to do the job.
Mistakes That Get In The Way
"These are all mistakes that can get in the way of the financial institution ever getting their outreach program going," De Dios told Credit Union Journal. "They think this will be an overwhelming burden and an operational nightmare to go through all this, translate materials into Spanish, create new products . . . This is wrong."
What it takes, said De Dios, is a comprehensive strategy-with buy-in from the very top of the organization-based on analysis of the local Hispanic population and an understanding that the effort is long term.
"Take it one step at a time, not all at once. You don't have to reach out to all the key segments within your Hispanic market at once. Go about it strategically, set a baseline for growth and measure results over time."
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