Reach Out to the Hispanic Market: Four Steps
|Warren Morrow describes the ideal CU member.|
The Hispanic market is the largest, fastest-growing, youngest, and most underserved market in the U.S. It presents a great growth opportunity for credit unions seeking to remain viable in the future.
According to the Pew Research Center, Washington, D.C., Hispanics will make up approximately one-third of the U.S. population by 2050. Currently, almost one of five people under age 18 is Hispanic.
Hispanics also play a major role in the U.S. work force. Almost half of all people entering the work force are Hispanic, according to the Bureau of Labor Statistics. The median age of Hispanics is 27, while the average age of credit union members is 47, report the U.S. Census Bureau and CUNA, respectively.
Hispanics have a purchasing power that’s expected to reach $1 trillion next year, according to the Selig Center for Economic Growth, Athens, Ga.—and yet 40% to 55% of U.S. Hispanics don’t have a relationship with a traditional financial institution.
The force of the Hispanic market is readily apparent. But how are credit unions tapping into this market?
As some credit unions struggle to grow due to aging memberships, increased regulatory burden, and competition from fringe financial service providers, others succeed by carrying out their mission of “people helping people” and serving this largely unbanked and underserved population.
Reaching out to a new market takes commitment and dedication to demonstrate you truly want to serve its needs. It’s not enough to simply translate marketing materials into Spanish or hire bilingual personnel.
Success requires deliberate, comprehensive steps resulting in a true partnership with the Hispanic community—where your credit union is a trusted financial service provider, an employer of choice, and a caring neighbor.
Adapt to the new market
The other half of the battle is adapting to the new market instead of waiting for it to adapt to your credit union. Doing so involves four key areas:
1. Personnel. Staff should reflect their communities in terms of language and culture. In most markets, recruiting Spanish bilingual and bicultural staff is essential. Train staff, managers, and board members about this market’s cultural nuances, and the benefits of serving the Hispanic community.
2. Products. Credit unions have products relevant to Hispanics, but they may not package these products in ways that are clear or useful to this market.
Some credit unions start with affordable transactions, then steer Hispanic members toward loans and deposits. Many Hispanics are uncomfortable with financial institutions. You need to gain their trust, then make them a more participatory part of your membership.
Services and activities that have become more prevalent in serving the Hispanic market, according to CUNA’s 2009-2010 Survey of Potential Members, include risk-based lending, acceptance of taxpayer identification numbers, Spanish-language materials, low-cost international remittance services, ads/articles in the Spanish-language media, nonmember check cashing services, and Spanish-speaking staff.
3. Processes. Some processes (i.e., credit analysis and identification) were established without sufficient understanding of Hispanics’ unique circumstances, especially those of immigrants. Credit unions must adjust these processes to serve this market.
The same goes for lending policies. You can’t use the same policies for this group as with a white-collar field of membership. If you do only A and B lending, you’ll have a tough time.
4. Promotion. Traditional advertising and marketing might be relevant so long as the local Hispanic market has been segmented and their needs and values are understood. But the most effective strategy for reaching most Hispanics is to activate grassroots social networks, use word-of-mouth advertising, provide financial literacy, and partner with key messengers within the Hispanic community.
Credit unions can overcome language barriers without having a huge bilingual staff—it’s certainly possible for someone who speaks only English to be welcoming and to make members comfortable.
Warren Morrow is CEO of Coopera Consulting, Des Moines, Iowa.