LAS VEGAS-The size and growth of the Hispanic market in the U.S. is no secret. Less well-known is how credit unions can better penetrate it.

First, the demographics. Miriam De Dios, CEO of Coopera, a Des Moines, Iowa-based subsidiary of the Iowa CU League that specializes in Hispanic marketing, noted that if "10% of California's Hispanic adults were members of a credit union, they would have contributed an estimated $592 million to annual income and $2.1 billion to loan balances. In Nevada, 10% of Hispanic adults would mean $28 million to annual income and $82 million in loan balances."

Approximately 38% of California's population is Hispanic, and Hispanics are on track to be the state's majority population in 2042. De Dios said that growth no longer is being driven by immigration, but by birth. The median age for California Hispanics is 27, compared to 39 for non-Hispanics.

"One in six businesses in California is Hispanic-owned, as opposed to one in 12 nationwide," she said. "These businesses, their employees and their customers all have financial needs, making this an opportunity for credit unions."

California is No. 1 in the nation in Hispanic buying power with $265 billion in disposable income, yet one in four Hispanics are unbanked. De Dios said they typically go to fringe financial service providers instead of CUs. "This is an entire market that is available," she said.

In Nevada, the 2000 to 2010 Hispanic growth rate was 82%, with a median age of 26 versus 44 for Caucasians. Eight percent of Nevada businesses (or 18,000) are Hispanic-owned. More than half of Nevada Hispanics are unbanked or underserved.


Getting Started

De Dios said many Hispanics are apprehensive of financial institutions due to experience and language barriers. There is also a lack of awareness that better options exist-credit unions.

De Dios urged CU leaders to look past what she termed common misconceptions: All Hispanics are undocumented, they only want check cashing, translation of all documents into Spanish is a big investment, and, it is better to wait for the second generation, which speaks English.

The reality:

* An estimated one in 10 Calif./Nev. workers are undocumented.

* CUs can accept non-U.S. government-issued ID cards, including Matricula Consular, passports for other countries, and Individual Taxpayer Identification Numbers

* The number of services per member are nearly the same for Hispanics as for the overall population

* Hispanics have a huge borrowing need. They start off with check cashing, but after that they are borrowing from family members.

If doing business in Spanish, California Civil Code requires contract/lease disclosures must be in Spanish, but not all documents.

Coopera recommends focusing on first and second generation, because first generation, Spanish-dominant group teaches behaviors to second generation. First generation is more likely unbanked and untapped, therefore an opportunity.


Knowledgable Tweaks

"Serving Hispanics is a necessity, not just an opportunity," she declared. "A growth strategy will encompass new membership growth, but also a strategy to serve current Hispanic members."

CUs need to build awareness in Hispanic communities. Before reaching out to the market, they should have foundation in place, De Dios advised. She said first the board and staff must have an understanding of the market, next comes promotion and product strategies.

"The Hispanic market has a number of segments," she said. "The first generation typically is born outside of U.S., but the second generation is very technology savvy. Grass roots approaches work very well, including offering financial education, filing income tax returns and other assistance. Radio and direct mail tend to me more effective than television, and they are less expensive."

Product selection is important, as is "tweaking" current products. De Dios said a standard consumer loan can be turned into a credit-building product-and not just for Hispanics.

"Build peoples' credit scores and then qualify them for traditional loans," she said. "But most importantly, avoid marketing to Hispanics without a good foundation."

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