WASHINGTON (6/2/14)--Minorities in low- to middle-income communities appreciate, and are more likely to use, financial institutions that are located in their communities or near their workplaces, according to a recent study by the Alliance for Stabilizing Our Communities.
Add in superior service and low fees--credit unions' historical strengths--and you have the optimum combination for what these demographic groups want for financial services.
The report, "Banking in Color," was produced by the National Coalition for Asian Pacific American Community Development, the National Urban League and the National Council of La Raza. It surveyed more than 5,000 individuals in Chicago, Houston and south Florida in the beginning of 2013.
Taking into account the top three most-desired elements, banks held the lead at 76% for those who have checking or savings vehicles, while credit unions came in at 17%. African-American and Hispanic respondents were more likely than Asian American and Pacific Islander (AAPI) respondents to use credit unions at 24%, 19% and 7%, respectively.
Given that nearly 70% use cash to conduct daily transactions and 45% use it for paying bills, "it is clearly important for individuals to access their funds with convenience," the report noted. Security concerns about electronic banking also tilt the scales toward the personal touch that comes with superior member service.
Also identified as "very important" when selecting a financial institution were account balance minimums, direct deposit for paychecks, ATM withdrawals for no or little cost, and cashing checks quickly and with reasonable fees.
The study recommended that in order to expand financial capability for the underserved, financial institutions should leverage community- and faith-based institutions that are trusted by their members.
Another finding was physical branches with bilingual staff "have an opportunity to be a trusted and reliable source of information for many immigrant communities." (See related story: GPO FCU embraces immigrant community.)
Although the amount may be small--few said they were prepared for a financial emergency--45% are committed to saving monthly, likely with in-person deposits into a savings account. Despite the challenges of employment rates and income levels, only 8% reported they did not save at all.