MADISON, Wis. (1/12/16)--When considering an intensified approach to serving minority members, why not look to the credit unions that already have established themselves as critical financial resources for these individuals?
A recent white paper from Filene Research Institute, called “Reaching Minority Households: Learning from Minority Credit Unions,” both asks and answers that very question.
Based on surveys of hundreds of minority credit unions, the paper found that the most effective ways for credit unions to serve minority members included offering:
Roughly two-thirds of all minority credit unions cited “targeted products” as the most effective way to engage with minority communities--though combining these strategies can prove even more effective.
“Many credit unions combine small-amount loans with financial counseling efforts to help turn emergency, unsecured borrowers into long-term savers who will eventually, (first), not need emergency loans, (second), improve their credit scores, (third), gain access to more affordable loans; and (fourth), generally improve their financial management,” the paper said.
The research also found that serving minority members requires a financial institution to adopt a different mindset than when serving nonminority members.
Wealthier members often deal in plastic or mobile transactions, but low-wealth consumers likely lead different financial lives, the paper said.
For example, in “financial services deserts,” retailers often don’t accept credit cards and instead require money orders or cash.
In response, “some credit unions have experimented with checkless cashing accounts with ATM and debit cards, but without the checks that payday lenders require,” the paper said.