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Opinion

Reaching Hispanic members should be a priority for every credit union

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The fundamental purpose of a credit union is to meet the financial needs of its community of members, and this can’t be done if the institution doesn’t reflect that community. This is particularly important when it comes to a group that faces unique financial needs and happens to comprise almost one-fifth of the U.S. population: Hispanics.

After seeing a 7% decline in personal income between 2007 and 2013 (largely due to the Great Recession), the Hispanic population in the U.S. as a whole have made substantial gains. But the U.S.-born population was hit hardest by the recession, and its recovery has actually gone in reverse since 2015. The U.S-born Hispanic population accounts for almost two-thirds of the total, and it’s growing faster than the foreign-born population.

And it’s a problem compounded by the fact that Hispanics are often underserved by financial institutions in the United States. Many of them are unbanked, do not trust financial institutions, often face language barriers, and don’t feel like they’re getting the individual assistance they need.

But it doesn’t need to be this way, and credit unions, which are mission-driven financial institutions, are uniquely positioned to offer an alternative.

Hispanics are often marginalized by financial institutions

According to the National Credit Union Administration, the number of minority-owned and managed credit unions in the United States is falling. Between 2016 and 2017, the total fell from 603 institutions to 580 – a 4% drop. In the preceding year, the decline was even larger: 7%. The NCUA also reports that minority credit unions are “heavily concentrated in just a few states” such as Texas, California and New York, while 12 states don’t even have one.

Despite the fact that 18% of minority credit unions are Hispanic-oriented, 36% of minority credit union assets are held by Hispanics. This is why it makes sense that states with large Hispanic populations like Texas and California also have a disproportionate number of minority credit unions. However, many other states with high concentrations of Hispanics can’t say the same: Arizona only has three, Colorado has five and Nevada has one.

Do these numbers really suggest that Hispanics are neglected by American financial institutions? Isn’t it possible that many Hispanics are just managing their money with regular, nonminority-owned banks and credit unions?

Unfortunately, the evidence suggests otherwise: According to the FDIC, 14% of Hispanic households were unbanked in 2017, compared with 3% for white households and 2.5% for Asian households.

It’s clear that one of the most significant segments of the U.S. population isn’t being well served by our financial institutions.

How credit unions can better serve their Hispanic members

Credit unions can lead the way in challenging this status quo. Unlike many traditional financial institutions, credit unions don’t have transactional and impersonal relationships with members – they focus on addressing each member’s unique needs and emphasize community engagement. According to a 2018 survey conducted by Raddon, these are top priorities for Hispanics when choosing financial institutions.

For example, 69% of Hispanic respondents say it’s important that their financial institution “provides personalized service and knows me as an individual,” while 47% say they want to do business with an institution that’s “involved with the Hispanic/Latino community in the area.” These are elements of the banking experience credit unions specialize in.

Meanwhile, 89% of Hispanics say they want their financial institution to give them “straightforward answers.” In fact, this is their top-ranked concern, which suggests that credit unions should offer personalized financial education programs, train their staff to answer questions openly and clearly, and provide a transparent set of terms and conditions.

Pew Research Center reports that the “number of Hispanics who speak Spanish at home is at an all-time high.” This is a reminder that credit unions can tie all three of the aforementioned priorities together. By hiring Spanish-speaking staff and providing documents and other materials in Spanish, credit unions will demonstrate that they’re addressing Hispanic members’ personal needs, serious about engaging with the community and committed to clear communication. It’s no surprise that half of the respondents (along with two-thirds of first-generation Hispanics) say they would value this effort.

A huge opportunity for credit unions

According to the most recent data from the U.S. Census Bureau, the Hispanic population in the United States was just under 59 million as of July 1, 2017. Since 2000, Hispanics accounted for half of all national population growth and they’re the second-fastest growing racial/ethnic group in the country. This massive segment of the workforce is also becoming more educated: almost 40% of Hispanics who are 25 or older had some college experience in 2015 – a proportion that jumped from 30% in 2000.

Recall that 14% of Hispanic households are unbanked, which means there are millions of potential Hispanic customers credit unions could be reaching out to. They should also be doing everything possible to remind their current Hispanic members that they’re vital members of their banking communities.

Hispanics are a rapidly growing segment of the U.S. population who have a unique set of financial concerns that often aren’t being met. But more importantly, they’re an indispensable and vibrant part of American culture, interwoven in thousands of communities across the country. Credit unions have a crucial role to play in making sure that they feel welcome, valued and as financially secure as possible.

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