By helping reevaluate the rules, the regulatory experts at your CU can open entirely new pathways for entirely new members.
COVID-19 made life extraordinarily difficult for a lot of people in ways they never anticipated. Adults that had never experienced a job loss, an inability to pay their bills, even homelessness or food insecurity, found themselves navigating unfamiliar financial territory. Many are still very much in the throes of their struggles and searching for support and resources.
Credit unions were built to offer hope in exactly these circumstances—to give their neighbors, all of whom were traditionally excluded from banking services, a safe, trustworthy way to access financial resources—especially during times of economic downturn.
That said, credit unions must also keep themselves out of financial trouble. Doing so requires them to adhere to a set of rules and regulations. It’s a rigorous, complex process made possible by the establishment of policies and procedures that leaders can train staff to follow. The trouble with many of these policies and procedures is they are built to address the mainstream, the traditional, the usual.
But, if we learned anything in 2020, it’s how quickly the usual can change.
Reevaluating the Rules
As the industry confronts a new normal in which members’ needs—and members themselves—begin to look different, compliance and risk leaders have a sizable opportunity to contribute. That’s because they are the chief owners of policies and procedures, not to mention the resident experts on all things regulatory in nature. By helping colleagues reevaluate the rules they’ve been following, compliance and risk leaders can open up entirely new pathways for entirely new members.
This is particularly true for consumers struggling with pandemic-related impacts that have pushed them out of mainstream financial services.
Expanding What’s Permissible One Policy at a Time
Take an individual who is experiencing homelessness, for example. Especially as economic forecasters warn of a foreclosures wave due to the pandemic’s impact on jobs, this is a circumstance that credit unions must be prepared for. Account opening procedures mandate that a credit union collect a physical address, which could be difficult for a prospective member experiencing homelessness to provide. Compliance and risk pros can review existing polices to be sure they encompass the full scope of permissible physical addresses. For instance, Title 31 Chapter X concerning customer identification programs states that an address must be collected. However, the regulation also allows for individuals without an address to provide one belonging to next of kin or of another contact individual.
Acceptable ability-to-pay documentation is yet another area compliance and risk leaders can help credit unions adapt for a broader range of assistance to a broader group of people. Methods and technology for evaluating creditworthiness are evolving, and plenty of alternative providers are taking advantage of them to prey on desperate people turned away by banks. With guidance and support from compliance and risk colleagues, credit union lenders and their teams can use the same strategy, except for good.
Members who are not U.S. citizens are another group of people in great need of financial assistance and guidance as the nation moves toward COVID-19 recovery. Many were left out of the stimulus package relief because of the lack of a Social Security number. Higher degrees of poverty and a higher level of employment in jobs that can’t be done remotely has put immigrants and their families at higher financial (and health) risk during the pandemic.
Compliance and risk pros can reevaluate policies and procedures to ensure identification forms other than a Social Security number are not only allowed but welcomed. A major part of executing an inclusive approach is going beyond acceptance to enthusiasm. If credit union staff are familiar with and comfortable checking international passports, ITINs or Matrícula Consular ID cards, for example, they are much more likely to nurture a welcoming atmosphere for people who want to join the cooperative.
Reengineering Escalation for a Better New Member Experience
Speaking of a welcoming atmosphere, compliance and risk leaders can have an impact in this area by helping design an escalation process that feels smooth and hospitable. When frontline staff understand what to do and to whom to go when they are presented with an unfamiliar form of identification, the prospective member feels accommodated and accepted. Particularly in underserved, close-knit communities, that kind of experience can kick off a highly successful word-of-mouth campaign that brings many new members to the credit union’s doorstep.
Involving Compliance and Risk Early On
Change is hard for many people, and it can be even harder when hindered by fear of running afoul of the law. This is where experts in regulatory compliance can step in. For those leaders to have the greatest impact, however, they should be involved in strategic discussions around growth and evolution as early as possible. It’s not uncommon for a credit union to build a financial inclusion plan without the upfront input of their compliance and risk folks. This, unfortunately, perpetuates a misguided stereotype compliance pros continuously battle—that they lead the “No” department. Getting these folks involved from the outset ensures financial inclusion programs are in alignment with the credit union’s regulatory obligations and strategic compliance aspirations.
Keep in mind, too, that compliance and risk leaders can serve as influential champions of inclusion. Because they touch so many areas of a credit union’s operations, they typically have a large internal network. Allowing them to be a part of developing a financial inclusion strategy and associated program may mean more team members see the value of the initiative and get involved to an even greater degree than expected.Leave a comment
Credit union partners developed new strategies and resources to reach Hispanic membership during the pandemic in 2020. Watch the vlog to hear Kenia’s forecast for the upcoming year and her tip to being prepared.
As first seen on cuinsight.com.
Nearly nine months into what has been one of the most challenging years in our lifetimes, COVID-19 continues to ravage the health, finances and spirits of many. In addition to disrupting everyday life, the novel coronavirus has brought to light long-standing societal and structural problems that especially predispose marginalized communities to dire consequences. One does not need to go far to see the alarming impact that the coronavirus has had on minoritized communities. The American Medical Association (AMA) has published a series of articles on health equity highlighting how some communities will suffer more acutely during the crisis. In terms of personal finance, Pew Research Center finds that economic fallout is hitting people of color the hardest. Mental health is profoundly impacted, especially with a situation that has no immediate end in sight.
Why are people of color being impacted in greater numbers?
Black and brown Americans are disproportionately represented in the service sector, where they are among the lowest paid, most likely to be laid off, least likely to be able to engage in work from home, and most likely to be exposed to the virus. New evidence also suggests that Black Americans face higher rates of coronavirus infection and mortality. Similarly, many Hispanics have been deemed essential workers who need to treat the ill, grow produce and stock shelves.
As noted in a Filene blog post earlier this year, one of the initial ways people talked about the coronavirus was that it “did not discriminate”, that it was an “equalizer” or an “equal-opportunity” threat. We now know that this could not have been further from the truth. Instead, the pandemic has disrobed the ugliness of inequality in the United States. COVID-19 is shining a light on what it means to have less income, less savings, fewer benefits like paid sick leave, and less access to insurance and healthcare.
Within the credit union community, we see a positive outcome: a renewed attention and support for storied system organizations that for decades have helped with the financial inclusion of marginalized populations in the United States. Even before it was called “DEI”, the African American Credit Union Coalition, Inclusiv, the Juntos Avanzamos Program, National Association of Latino Credit Unions & Professionals and Coopera had been helping the system understand what it means to “do good by doing well”. And we see the industry crafting new initiatives to support the vast jurisdiction of DEI. Recently Filene created the Center of Excellence for DEI, and Superbia and CU Pride have joined the inclusion effort to bring light to LGBTQ+ community needs. Additionally, a group of credit union partners have organized to create the CU DEI Collective, a collaboration to advance the understanding and adoption of diversity, equity and inclusion initiatives. I am proud to chair this new initiative.
This list is by no means all-encompassing, rather, it highlights the growing concern, interest and support for DEI. There is an industry pledge that calls attention and encourages action so that we as a movement commit to change. Has your organization committed to change? This pledge outlines a number of actions to be taken by credit unions on their path toward fulfilling their mission to relentlessly include.
What other actions can be taken at the state and local levels if you are a member, a leader or a staff member of a credit union?
At the state level, community-based organizations are natural partners for credit unions. Together, they are deploying educational resources to help with understanding the societal and systemic structures that keep certain populations marginalized. Case in point, the 21-day Challenge from the United Way. Over the 21-day Challenge, you will take a self-guided learning journey that examines the history and impacts of racism and how it shapes people’s lived experiences. Many United Way state chapters are encouraging participation in the challenges.
At the local level, we see credit unions responding to unique homegrown challenges, depending on the intensity and particular characteristics of the pandemic in their neck of the woods. The cycle that we see spans from crisis management, emergency relief, to staff health, and keeping operations up and running to support members through varying degrees of financial stress.
As the COVID-19 challenges continue, credit unions should stay focused on connecting and using their mission of inclusion to help ALL, but place a special interest and focus on marginalized and underserved segments of society so they start feeling a sense of belonging. Deliberate action and clarity will guide our movement to achieve it. The “people helping people” stated mission of credit unions has once more become a call to action and motivator to do good. This mission can certainly help in aiding relief amid the wretched 2020 pandemic. Let’s be a force for good.Leave a comment
Credit unions have an opportunity to position themselves as trusted financial partners of the immigrant community. Last month, the Supreme Court of the United States ruled in favor of the Deferred Action for Childhood Arrivals (DACA) program. This immigration program was created through an executive order from President Obama in June 2012. For the last eight years, the DACA program has helped many immigrants fulfill dreams and achieve success in this country, by providing deportation relief and work authorization. Credit unions were at the forefront of providing financial services to the first DACA beneficiaries. We witnessed credit unions create “Dreamer Loans” to help individuals pay for their legal and immigrant fees. Now that DACA has been given new life, will credit unions rise to the challenge once again to help with the obstacles young immigrants face?
DACA recipients are aware of the vulnerability of the program because it is not a law. The September 2017 decision by the Trump Administration to rescind the DACA program left many young immigrants in a challenging position. After a three-year legal battle between federal courts and the administration, the case was ultimately heard by the Supreme Court. The administration has decided to continue accepting DACA renewals while limiting the term from two years to one. It was also decided that they will not be accepting first-time applications and most advance parole applications. This contradicts the Supreme Court’s ruling and immigrant advocates are planning to challenge their decision.
Terminating the program would negatively impact immigrant families, our healthcare system, essential workers, and the economy as a whole. The Center for American Progress estimated that more than 1.1. million undocumented immigrants met the basic DACA requirements. Roughly 825,000 immigrants have been granted DACA at some point during these eight years, leaving approximately 300,000 young immigrants who would qualify to apply for the first time.
Credit unions play a very important role in the lives of immigrants. From opening accounts and providing services to those who have Individual Taxpayer Identification Numbers (ITIN) and alternative forms of identification.
If the administration moves to accept first-time applications, about 300,000 young immigrants will need assistance to pay for their legal and immigration fees. These individuals do not have social security numbers. Here are some steps to take to assist them:
– Ensure your policies are welcoming of individuals with ITINs. A member may be considered an unauthorized immigrant today, but may obtain a legal status later.
– Repackage a personal loan as an immigration loan. This will help your credit union with marketing and awareness among an immigrant population.
– Partner with non-profit and legal service providers to support their efforts to help young immigrants complete their first-time and renewal DACA applications.
– Expand your scholarships to include both undocumented and DACA recipient students, as they cannot access federal aid to pay for higher education.
Credit unions helped DACA recipients back in 2012. Since then, they have built long, lasting relationships and many have even financed their first mortgages with the same credit unions that lent them money for that first-time DACA application. Here is an opportunity to help young immigrants again. Is your credit union ready?Leave a comment
As first seen on cuinsight.com.
Experts have predicted that this is the year the U.S. Latino population will comprise the majority of new household formations and, correspondingly, new home purchases.
The last decade has seen the U.S. Latino population emerge as the fastest-growing demographic in an increasingly diversifying nation. We know that the 59.9 million Latinos who currently call the U.S. home account for one in every five members of the U.S. population. Thanks to anticipated continued growth, Latinos will comprise one in every three members of the U.S. population by 2050.
Along with population growth comes an escalating and formidable financial impact. We’ve already seen it happening nationwide, with significant increases in savings and buying power and a dominant growth rate in labor force participation. For most of us, our ultimate financial goal is home ownership, and more Latinos than ever before are participating in the housing market. Their participation will only increase as the population continues to grow.
Research data from the National Association of Hispanic Real Estate Professionals (NAHREP) bears this out. In 2018, Latinos represented a net gain of 362,000 new homeowners. This raised the rate of new Latino homeownership to 47.2 percent of all new homeowners, compared to 46.2 percent in 2017. Over the past decade, Latinos have accounted for 62.7 percent of all new U.S. homeownership gains, NAHREP reports, growing from 6.3 million homeowners during the period to nearly 7.9 million homeowners by 2018. By 2030, researchers anticipate that 56 percent of all new homeowners will come from the Latino market, which will then dominate the sector.
Plainly put, this is a sea of change in the market that could sink mortgage lenders who are not prepared to tap into it. Credit unions, known for working with their members, may be in a better position than other lenders to ride the wave to increased success. However, not all institutions are well prepared in reaching out to Latinos in meaningful ways. Lose enough of these opportunities among Latino borrowers, and rest assured their other business will follow.
To reach this growing market, you must understand and respect the ways in which the Latino community differs from the more traditional market your credit union may already be serving. And even within the Latino market, there is diversity based on age, family structure and country of origin. My team analyzes geographical Latino markets to determine potential-member product needs and growth strategies to attract what is often an underserved or unbanked community.
Understanding is the key to everything – from marketing approaches to operational success. The more specialized your efforts are, the more successful they will be. The basics, of course, include involving bilingual staff at all levels who are well trained and culturally sensitized to the needs of Latino members. Creating a corporate culture from the board of directors to the teller line that not only accepts, but embraces this market is a necessity for success.
For a more nuanced approach to marketing, NAHREP again offers some research-based observations. Research data has shown that Latinos believe advertising is meant for them when it includes people who look like them (52 percent), reflects their cultural values (59 percent), and recognizes their cultural background (61 percent). Integrating those sensitivities in all member communications as well as exploring other operational alternatives [including making loans using Individual Taxpayer Identification Numbers (ITINs)] are critical steps in reaching this market.
Not every credit union is comfortable making such changes at first, but those that do are already seeing an increase in Latino home mortgage business. Reach out to your Latino community to help more members join the swell of new homebuyers. Explore holistic secondary market options like Inclusiv’s Mortgage. Create an environment in which everyone – lenders and members – can ride the wave of financial success.Leave a comment
Communicating with members is important, and the current pandemic has led to a flurry of change and resources. Don’t let your minority members get lost in the shuffle! Check out the video above to learn about three things you should be communicating to minority members.
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Is your credit union communicating to members who don’t speak English during the COVID-19 pandemic?
Here are some resources that can help:
For additional resources, contact the Coopera team at email@example.com.Leave a comment
Coopera Client Relations Director Kenia Calderon Ceron recently traveled to Houston, TX to meet with a credit union about Latino member growth and strategic planning.Leave a comment
As first seen on cuinsight.com.
No doubt about it – 2020 promises to be a vibrant, dynamic year, and one favored by a continuing robust economy. Credit unions, like all organizations in the financial space, are primed for financial growth. But credit unions have one advantage that other financial providers don’t have. As member-owned financial cooperatives that focus on service and inclusion rather than profits, credit unions are in the best position to serve the country’s rapidly growing Hispanic community.
Many credit unions already know this through experience, and both the institutions and their Hispanic members are gaining from their relationships. But more financial cooperatives need to strategically pursue Hispanics and all the financial potential they bring, for the sake of their own institution’s relevance as well as for the growth of the credit union community nationwide. And they need to do so now, before more of the competition catches on.
Hispanics continue to be the U.S. population’s most rapidly growing segment and their numbers are staggering. According to the U.S. Census Bureau, there are 59.9 million Hispanics who call the U.S. home, comprising close to 20 percent of the population. By 2060, experts say, that number will grow to 119 million, or almost 29 percent of the population. Today, one in five U.S. consumers is Hispanic; by 2060, it will be close to one in three.
Think about the implications of those data points and the impact they will have on our evolving social and cultural landscape. Individual credit unions have done very well in getting to know their Latino communities, serving them in ways that make sense to those members and encourages them to engage with the credit union. But many experts have noted that future credit union growth will likely come largely from the Hispanic community, given their rapid demographic growth. As an industry, we have yet to make a concerted effort to reach the Hispanic population on a nationwide basis in profound ways that reach beyond translated marketing materials.
Other industries, and even other financial providers, are far ahead of credit unions when it comes to approaching and serving the Latino community.
– As far back as 2002, Frito Lay introduced an extensive line of snack food targeted at the Hispanic market after testing showed that U.S. Hispanics favored snacks flavored with chile, citrus and cheese seasonings. Frito Lay understood that cultural differences come in different flavors.
– In 2012, household brand manufacturer Proctor & Gamble (through Orgullosa, its subsidiary devoted to celebrating and empowering Latinas), initiated a program through the Hispanic Scholarship Fund that financially supported Hispanic youth pursuing careers in STEM (science, technology, engineering and mathematics). P&G knew that supporting the Hispanic community is a large part of building relationships with its members.
– Even Bank of America has invested heavily in serving Hispanics. Through its Hispanic and Latino Organization for Leadership Advancement (HOLA), which had grown to more than 30 internal chapters by 2003, the $2.4 billion bank teaches employees and managers how to better understand and serve the Hispanic community nationwide. They know that better customer relations mean more business and increased loyalty.
Coopera’s goal is to help credit unions prosper through better service to the Hispanic community. But we are only half the equation. Credit unions themselves must step to the plate to better capitalize on this rapidly growing market. Those who do are almost guaranteed to hit a home run.Leave a comment