Rare is the opportunity for a new member base of millions to present itself to the credit union movement. Yet when President Obama’s executive action on immigration is enacted, an underserved and under-targeted segment of now-documented income earners could be a big win for community-oriented credit unions.
Much of the conversation about U.S. immigration began in earnest after the 2012 elections. The dialogue was accelerated significantly in the fourth quarter of 2014, as the president’s executive action promised to protect an estimated 5.2 million undocumented immigrants from being deported. The objective of this move is to enable a simpler “path to citizenship” for millions.
According to the 2013 Pew Research Center Hispanic Trends Project, there are an estimated 11.7 million undocumented immigrants currently living in the U.S., a number expected to continue to rise. Credit union leaders who think strategically about membership growth can’t afford to ignore this market.
Having gone through the immigration and naturalization process with my family when I was a child, I remember a demanding and expensive process. And while the result was worth every step it took to achieve, it wasn’t an easy journey.
As the first person in my family to learn English, I had been my parents’ trusted interpreter and advisor on everything from filling out money orders to figuring out our immigration application status so we knew when to move on to the next phase.
The immigration process is a costly one and will be cost prohibitive for many families. Credit unions should consider repackaging existing savings accounts and consumer loans to help these influential individuals save and pay for immigration expenses.
Some credit unions have already begun this process. Others have also connected with community organizations, immigration attorneys, legal clinics, interpreters and other local service providers to make this process easier.
The real and obvious benefit, however, is the ability to introduce an entirely new segment of the American consumer market—no longer hindered by the lack of traditional identification and documentation—to the credit union difference.
According to the Migration Policy Institute, the total number of Mexican immigrants in the U.S. reached a high of 11.6 million in 2013—up from 2.2 million in 1980. Whereas U.S.-born consumers may not think twice about using traditional financial institutions to save and borrow, a Hispanic immigrant may not think this is even an option.
With check-cashers, money order providers. and friends or family fronting loans, traditional financial institutions often are not even considered by Hispanic immigrants.
There are several factors that prevent many Hispanics—both U.S.-born and immigrant—from using traditional financial institutions. These include the fear of rejection due to a lack of credit, a potentially unwelcoming environment, and the perception of higher fees to incur or red tape to overcome.
Credit unions can change this by doing many of the things credit unions are already great at: establishing trust and working with their communities to start building relationships that can mature over time.
Credit unions that start this process now or are already working with Hispanic communities certainly have a leg up.
How should credit unions approach new citizens and specifically the Hispanic population? By getting to know the audience.
Start with culturally relevant financial education that takes into account how Hispanic immigrants handle their money today and shows them better alternatives that help them achieve financial success.
If my parents and I had engaged with credit unions earlier in our immigration experience, we might have avoided many of the pitfalls that seemed inevitable at the time.
Imagine being a credit union that not only finds a new member base, but also creates a sense of peace in what is typically a turbulent time. The opportunity to provide guidance on other financial emergencies, such as car breakdowns, emergency medical visits, or the special needs of relatives in Mexico will help these new citizens prosper.
And they’ll have you—an important member of their growing community—to thank.
It’s this kind of outreach that ultimately allows credit unions to plant the seeds of trust that grow into loyal, life-long memberships.