Credit unions with strong Hispanic growth programs have three things in common – intention, cultural alignment and an adaptive spirit.
Cooperatives most successful at earning Hispanic engagement started with a strategic plan to serve this particular community of influencers. Take Arizona’s Vantage West Credit Union, for example. The $1.4 billion institution knew a solid strategic plan had to begin with equally as solid research. Working with Coopera, the cooperative did not stop with demographics alone. The credit union’s leadership worked to identify other factors, such as language preference and product adoption rates. It also used research to determine which of its branches served the most Hispanic members and which had the greatest potential for growth based on population trends.
As the number of Hispanic professionals leading the movement becomes a stronger reflection of the country’s population, cultural alignment will become easier. Today, however, it may take work. Building the right organizational mentality and internal culture to serve a new market is absolutely critical. That’s precisely how Travis Credit Union has been so successful at earning the trust of its local Hispanic community. Yet, as Travis’ Sherry Cordonnier points out, building the internal culture may come from outside influences. The $2.3 billion California credit union has learned this first-hand from the impact of its own Hispanic Advisory Committee, made up of 13 Hispanic leaders in the community.
“On the committee, we have a broad spectrum of individuals who can talk about what it’s like for an immigrant family, or how to talk to the migrant worker, or how to reach out to the educated Hispanic who wants to start a business,” Cordonnier told Credit Union Magazine.
Most credit unions understand their membership strategy must evolve. Those that have developed an achievable plan to actually implement that strategy are stand-outs in Hispanic member growth. These credit unions are adjusting everything from products and departments to marketing and operations to become highly relevant to their new target market.
River City Federal Credit Union in San Antonio provides an ideal model for this kind of organization-wide evolution. Since beginning its Hispanic outreach initiative, the $131 million credit union has expanded its branch strategy, upgraded core business systems and invested in new electronic services, including bilingual mobile banking.
That this list of must-haves begins with intention is not a coincidence. It’s the most important component to achieving success in Hispanic growth efforts. The credit unions above have demonstrated excellence within each of the three must-haves for successful Hispanic engagement; but each began with a commitment and the intention to see that commitment through. The same can happen within your cooperative. If you feel a pull for a deeper, more emotional connection with the youngest, fast-growing and most underserved community in your market, gather up a team and begin putting thought to your own intentional growth strategy.Leave a comment
The hottest market for credit unions just keeps heating up. Hispanics in America, both U.S. born and immigrant, are on the radar of more credit union CEOs, CMOs and board presidents than ever before. And rightly so. Just look at what’s happening with this critical consumer segment:Leave a comment
Federation colleagues and I have been overwhelmed by the terrific response to the financial inclusion campaign, which kicked off in January at the Financial Inclusion for Immigrant Consumers Roundtable held in Los Angeles.
Ivonet Gomez, marketing manager for USC Credit Union in Los Angeles, was one of more than 50 professionals who attended the event. Following the roundtable, she shared this insight with Coopera:
I thought the roundtable was very well executed and perfectly timed given the government’s new immigration reform. The information provided by all presenters was insightful and helpful.
I really enjoyed Senator Cedillo’s testimonial and appreciate our city council’s involvement and support of this initiative. I have heard about the Deferred Action for Childhood Arrivals (DACA) and Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) programs before, but I was not aware of the details and upcoming expansion guidelines for these programs before the roundtable presentation. Also it was insightful to learn the Mexican Matricula Consular is now accepted as a valid form of identification at the DMV and other financial institutions. The Mexican Consulate is offering all credit unions a great opportunity to participate and get involve firsthand with those that need our help the most.
The next steps for our credit union are to plan a Hispanic growth strategy, create new products/services that promote financial inclusion to immigrants through DACA/DAPA, and promote loans with a credit history building purpose and savings component.
We understand the importance of all credit unions getting involved in this particular moment, when it is key to serve our immigrant community. We will continue to participate and be one of the credit unions that drives, collaborates and implements these initiatives to better serve the underserved communities in Los Angeles. This is our time to take action.
We couldn’t agree more with Ms. Gomez’s remarks; this is indeed the time for credit unions to show how they differ from other financial institutions and to extend a hand to a population that needs credit unions as much as credit unions need them.Leave a comment
In all the years I’ve been blessed to be a part of the credit union industry, I have never seen the level of interest in serving immigrant and underserved communities as high as we’re seeing right now. It’s extremely rewarding and very encouraging to see the movement grab hold of this significant opportunity.
Most recently, we witnessed this growing curiosity among credit union leaders through our financial inclusion campaign with the Federation. Just two webinars and a roundtable event have already brought together close to 250 people excited to discuss how to provide financial inclusion to immigrants impacted by the president’s recent immigration executive order.
I can’t wait to see how many immigrants are brought into the financial mainstream and how many more credit union leaders we are able to reach as this campaign continues.
As reported by CU Today, it was apparent during the roundtable event that credit unions leaders’ comfort level with offering products and services to the immigrant population is rising.
“Energy and enthusiasm levels remained high into the afternoon with presentations from Catholic Charities of Los Angeles and California, the Coalition for Humane Immigrant Rights of Los Angeles (CHIRLA) and the National Council of La Raza (NCLR) on how to leverage partnerships,” reads a recap blog post by the Federation.
Credit unions from the local area, Phoenix and Washington, D.C. participated in the Los Angeles roundtable event. However, as evidence by the webinar attendance, this is an issue of interest to credit unions in all parts of the U.S. Professionals from across the country participated in those two online events.Leave a comment
For many people – especially those of us working in the financial services industry – it can be difficult to understand why someone would not have a bank account (or if they do, why they would still use costly alternative financial services). Yet, legitimate and systemic reasons for a lack of traditional financial relationships offer a glimpse into the “why’s” behind our nation’s underserved communities.
At the recent 2014 CUNA Community Credit Union and Growth Conference, credit union leaders and I dug into the question “Why Are Consumers Unbanked” to uncover strategies that may help the movement better serve these individuals.
Below are just five of the “why’s” we discussed:
Misperceptions about money persist
Geography plays a role
Culture can be a driver
Past behavior predicts future
Language barriers are real
For credit unions, we discussed, there exists a great opportunity to provide a better alternative for these individuals. That’s because everyone has financial service needs – almost daily. Take a look at the five “why’s” above and ask yourself if your cooperative can address any or all of these for your local unbanked and underbanked community.Leave a comment
We get asked often why a firm focused on Hispanic outreach is based in Iowa, a state many consider less-than-diverse. In fact, the Hispanic population in our home state more than doubled from 2000 to
The change to our state’s consumer make-up has not escaped the attention of Iowa’s credit unions. Leaders of the state’s movement are right now exploring ways to invest in service to Hispanics, the largest, fastest-growing, youngest and most underserved group in the U.S.
To help, Coopera and the Iowa Credit Union Foundation (ICUF) recently facilitated a roundtable for Iowa credit unions. In the 4-hour session, we joined four credit unions already doing an excellent job with service to underserved consumers, many of whom are Hispanic.
Among the different ways we talked about adapting credit union products and services to this special market, the concept of unique payment products stood out. Because underserved consumers continue to use high-cost alternatives to pay bills, make rent payments and secure short-term loans, payment products present a sizable opportunity for credit unions looking to reach this market.
Here are just a few of the alternative payment providers already popular with the underbanked, Hispanics included:
PayNearMe: This provider issues plastic cards and PaySlips that can be printed or displayed on a mobile device.
Walmart: The retail giant continues to diversify its financial service products, which include everything from credit cards to money transfers. Most recently, it began marketing a low-cost checking account.
LendUp: Credit-building loans starting as low as $250 available with instant approval online. (Of course, it comes with a hefty price tag at 29% APR).
WipIt: Allows Boost and Sprint mobile phone users to make payments with cash directly from their phone.
OnDeck: Provides small business loans online, and underwriting is based on performance rather than individual credit.
Boom: A prepaid card with mobile banking features.
For each of the above, our expert panelists brainstormed alongside Iowa credit union leaders how cooperatives could compete and why they should. It was an excellent discussion, and one I’d be happy to share in more detail one-on-one. Send me an email with your thoughts or questions and we can talk through your credit union’s payments strategy and how it may be configured to appeal to the underserved Hispanics in your community.Leave a comment
I don’t think many of us were surprised to hear of Walmart’s unveiling of a new checking account with an $8.95 monthly fee and no overdraft or returned check fees. After all, the writing has been on the wall for some time, as we’ve watched the mega retailer dip its toes into financial waters.
What was less expected, however, was Walmart’s rollout of health insurance services this month.
So, who is Walmart targeting with these new products? We believe the target is a specific sector of its existing shoppers – the unbanked/underbanked and the uninsured/underinsured markets, and in particular the Hispanic market.
Unbanked individuals do not have a traditional financial institution account, providing a potentially large gap for Walmart to fill. As for the underbanked, these consumers may have a traditional savings or checking account; however they largely rely on non-traditional financial service providers, such as check-cashers and money transfer services, for many of their financial transactions.
Did you know that 1 in 12 U.S. households is unbanked and 1 in 5 U.S. households is underbanked? That’s a total of 34 million households in the U.S., according to the FDIC’s 2011 National Survey of Unbanked and Underbanked Households.
The health insurance market also represents a sizable opportunity for Walmart, as the U.S. uninsured rate is now at the lowest level recorded since 2008. For the Hispanic market, that means nearly 1 in 3 people are uninsured.
Why Walmart Sees Potential in These Markets
There is a misconception about the unbanked and underbanked market all being low-income, high risk and not profitable clientele. Walmart knows better. The U.S. unbanked and underbanked market does include low-income households, yet it also includes immigrants, young people, minority groups and single family households with financial needs.
These individuals spend much of their paychecks on pricey alternative financial services, to now include Walmart’s checking account and prepaid cards. (If you’re thinking $8.95/mo sounds pretty affordable amid news of rising fees, keep in mind the average monthly service fee for a non-interest checking account fell 5 percent to $5.26 over the past 12 months.)
A large percentage of U.S. unbanked and underbanked households are made up of Hispanics. Much of this stems from cultural preferences vs. a lack of financial stability. Hispanics are also the largest, fastest-growing, youngest and most underserved group in the U.S. with more than a trillion in purchasing power – a prime untapped market for credit unions.
One thing is for sure, profit-hungry Walmart would not introduce these products if it did not foresee strong potential. It’s clear their executives have identified the above consumer segments, many of which include Hispanic consumers, as a hot, untapped market. Credit unions must not acquiesce – these markets are tailor-made for the “people helping people” philosophy and are primed for generating tremendous revenue and membership growth.
As Scott Butterfield from Your Credit Union Partner notes in Credit Unions and The Ultimate Category Killer, “Overlook the Hispanic community at your own risk.”Leave a comment
With intense growth of the Hispanic market across the country, more U.S. credit unions are looking to add money transfer programs, known as remittances, for Hispanic immigrants with family in Latin America.
And now may be an ideal time to play in the market.
U.S. remittances to developing countries reached $404 billion in 2013 and are predicted to grow to $516 billion by 2016, according to the World Bank. At the same time, an increasing number of providers have dropped their remittance programs, leaving a competitive opening for credit unions.
The shuttering of many long-time remittance providers is due to an unprecedented compliance burden. This has also led to the development of an industry that is, as this PaymentsSource article puts it, “ripe for startups.” There are now even international start-ups looking at the U.S. with aspirations of market dominance.
As the remittance industry shape-shifts to meet increased scrutiny from regulators, some credit unions are looking to find new partners who can help them compete in this important space.
Credit unions should view remittances services as a value-added tool designed to increase the depth of the membership experience. Coopera’s research (performed in conjunction with the World Council of Credit Unions) found that remittance services, when combined with an intentional Hispanic growth strategy, can earn a credit union much higher volumes as compared to those credit unions without a strategic approach.
If your credit union is looking to develop or make changes to its remittance offering, here are a few things to keep in mind:
Understand the geographies you must serve – Not all remittance providers serve the same locales. Before creating a partnership, understand your Hispanic members’ countries of origin and the available locations within a typical recipient’s country.
Survey the competition – Examine your local market to understand how you can provide the most competitive offering. What other local organizations are providing remittance services? What are they charging? What are their hours of operation, etc.?
Investigate the alternatives – When issued to a Hispanic cardholder in the U.S. alongside a secondary card for a family member in Latin America, a reloadable prepaid card like the Coopera Card is an affordable and accessible option for sending money outside the country. What’s more, reloadable prepaid cards do not require compliance with the CFPB’s remittance transfer disclosure requirements.
Know your compliance burden – While the cost of compliance will mostly fall on the shoulders of third-party service providers, credit unions will be held ultimately responsible for providing the appropriate disclosures.
Develop a member experience strategy – How will the credit union transition first-time remittance users to more products? Incentives like offering the fourth or fifth remittance free can keep remitters coming back to your shop for more remittances, but how will you engage them with other products and servicesfor the long-term?
Especially given recent industry upheaval, remittances are a much-needed service for Hispanic immigrants with family members residing in Latin America. In fact, Coopera has made remittances a best-practice solution for credit unions looking to invest in the largest, fastest-growing, youngest and most underserved segment of the U.S. population. While there are certainly barriers to entry, keeping the above pointers in mind can help you break through those obstacles to deliver a needed solution to your Hispanic members and prospective members.Leave a comment
The following case study is an excerpt from Coopera’s Iowa Hispanic Opportunity Report for the Iowa Credit Union League (ICUL). For more information, contact the ICUL at www.iowacreditunions.com.
Veridian Credit Union, headquartered in Waterloo, Ia., has a long history of offering innovative and affordable financial services to members. One way Veridian differentiates its business from other financial service providers in the area is by offering services specifically designed to improve the socio-economic well-being of those in greatest need — including the local Hispanic community. For Veridian it’s not about the business’s bottom line; it’s about best serving members’ financial needs.
“Many years ago, Veridian recognized a need to offer Latinos in our communities more affordable products and services compared to the expensive alternatives they were using,” said Angela Weekley, Veridian community inclusion manager. “We also understood that our credit union’s value to members was to help them build a successful financial future, rather than offering one-off solutions.”
To aid their efforts, Veridian began working with Coopera to better understand the nuances of the Hispanic culture, to learn more about what this market needed out of a financial services provider and to build a relationship with the Hispanic communities in its operations areas. Coopera also gave Veridian guidance in hiring bilingual staff, as well as marketing and tailoring its product and services mix to this very important demographic.
According to Shelly McGill, Veridian’s Central Iowa regional manager, offering the right products and services was very important to meeting Latino members’ unique financial needs. One of the actions Veridian took was to give members a viable alternative to expensive payday-loan centers and check-cashing services. To do this, Veridian introduced an affordable alternative to traditional payday lending outlets in early 2007. “The Payday Lending Alternative (PAL) loan features a savings component to help break the cycle of dependency on payday loans,” said McGill. “This program was a success almost immediately. Just two years after it was introduced, Veridian had already awarded more than 4,700 PAL loans to both Latino and non-Latino members.”
Veridian also started offering the Coopera Card, a prepaid card tailor-made for the Hispanic market. Quinceañera loans, checking and savings accounts, CDs (Certificates of Deposit) and credit card accounts, as well as home equity loans, round out the services of which Veridian’s Hispanic members take advantage.
In addition to those products, Veridian made an effort to enhance its member services. They became an ITIN (Individual Taxpayer Identification Number) acceptance agent to help community members apply for their ITIN number through the IRS, and also began to offer interest-bearing safe savings accounts and loans to Hispanic members without traditional forms of identification and documentation. Veridian’s ITIN loan offerings include credit builder loans, auto loans and consumer loans such as the PAL, share secured co-signer loans. The company also focused on offering financial education opportunities, like a credit builder loan program, to help immigrant families better acclimate to the U.S. financial system. Prior to hiring additional Spanish-speaking staff, the credit union incorporated an AT&T Language Line better-equip English-speaking staff to assist Spanish-speaking members.
To support these products and services, Veridian also began to enhance its internal infrastructure for Hispanic outreach. “We make a point to hire bilingual staff in our branches when the opportunity makes sense, even adding more staff in those locations with greater non-English speaking populations,” said Weekley, who noted the credit union currently employs 23 Spanish-speaking staff in its 26 branch locations. “We implemented a diversity training program for all employees to make sure everyone is on board with the company’s goals and efforts.”
Weekley added that Veridian started their outreach to the Hispanic community by forming an advisory council made up of staff and local community members. It helped the credit union better understand the Hispanic community’s needs and make recommendations on how Veridian could best meet those needs.
Veridian continues to focus its external marketing efforts on better targeting Latinos. “We create bilingual brochures and collateral for our products and services,” said Weekley. “And, we advertise in Spanish newspapers and on local radio stations. We make sure to participate in public relations opportunities, like providing information or quotes for articles in newspapers and magazines, to build awareness about Veridian and its outreach efforts.”
“We asked the council to review our initiatives to make sure they make sense for our Latino members,” said Weekley. “Advisory Council members reviewed materials to make sure our translations accurately reflect the messages we wanted to communicate.”
In addition to its marketing initiatives, Veridian’s external outreach efforts include becoming an active participant in the local communities the credit union serves. Every year, staff participate in local Latino Heritage Festival and Cinco de Mayo celebrations, as well as partner with organizations like J&E Entertainment in Iowa City, Ia., to host an annual Sunset Salsa event. And, each July, Veridian is the presenting sponsor for Festival Latino de Cedar Rapids in Cedar Rapids, Ia.
The cooperative is also active in community organizations. For example, McGill serves on the Latino Forum of the Urban Core, a Des Moines based group of members and supporters of the Latino community. “We really care about the people in our communities,” added Weekley, “and we are proud that our actions and intentions are authentic. The best way to prove this to our members is by truly becoming a part of their lives.”
All of these efforts have been successful thanks to the credit union’s hard work and dedication to this mission of improving its members’ lives. To continue its success, McGill noted that Veridian keeps up-to-date on the latest rules and regulations in the financial industry, makes sure the cooperative is offering products and services that not only make sense for members but that also comply with the law .
“Because we are a cooperative, rather than a for-profit business,” said McGill, “we can focus on doing what’s right for our members. Our results prove this is the right approach. In 2012, we experienced a 10-percent growth in our Latino membership.” Currently, 6,398 of the credit union’s 174,000 members are Latino.
Weekley concluded, “We truly listen to the voice of the people — not just guess which products and services Hispanic members need. We ask them for input and then deliver what they want. We are proud of what we’ve accomplished so far and will continue to look for ways to grow our efforts and opportunities in the future.”Leave a comment
When Greater Iowa Credit Union, headquartered in Ames, Ia., acquired two branch locations with large Hispanic membership populations, the senior leadership team knew the credit union had to step up its efforts to serve this important member segment. Focused on positively impacting its membership base, Greater Iowa implemented a Hispanic initiative, which started as a very marketing-centric approach and grew it to include full credit union involvement.
The first step Greater Iowa took was to apply for the Credit Union Remittance Outreach Program (CUROP) grant from World Council of Credit Unions (WOCCU), Coopera and the Iowa Credit Union League (ICUL). At the time, Greater Iowa did not have a remittance program in place and knew it needed help to implement a successful one if it was to provide an affordable and convenient alternative for Hispanic members sending money to loved ones in Mexico. “Greater Iowa was one of only three Iowa credit unions accepted into the program that year,” said Michael Adams, Greater Iowa’s vice president of marketing and public relations. “It became the jumping off point for the credit union’s entire Hispanic-focused effort.”
Adams became the point person for Greater Iowa’s external efforts, immersing himself in the initiative and leading the charge for the credit union’s Hispanic marketing, outreach and community-involvement programs. The company partnered with Coopera to guide them on next steps. “At Coopera’s recommendation, we refreshed our marketing collateral to be more focused on the Hispanic community’s financial needs, which included of course, Spanish translation,” said Adams.
He continued, “We also developed a portal site that our Spanish-speaking members can use any time to gain immediate access to our bilingual materials. And, we started advertising on the regional Spanish-language TV channel, on two Spanish-language radio stations and in two Spanish-speaking newspapers. In addition, we put together a testimonial TV commercial featuring one of our Hispanic members from the Denison branch.”
With Coopera’s guidance, Greater Iowa also gained insight into the cultural and lifestyle nuances of its Hispanic members. This knowledge enabled the credit union to further fine-tune its efforts. “We found with the Hispanic community that word-of-mouth referrals can really make or break a credit union’s success in a local market,” added Adams. “To increase opportunities to reach more members in the communities we serve, we began to take a more active approach toward earning positive word of mouth.”
According to Adams, this included participating in Iowa’s annual Latino Heritage Festival; speaking at industry events, such as the 2012 Latino Credit Union Conference in San Diego, Calif.; participating in editorial opportunities with industry media and starting an annual scholarship program for first- and second-generation Hispanic high school students.
Additionally, the credit union began to host its own member appreciation events throughout the year. For example, Greater Iowa’s East Des Moines location hosts an annual Fiesta de Navidad event during the Christmas season, and its Denison branch puts on an annual Cinco de Mayo event in May. “The first year we hosted our Fiesta de Navidad party, we had 300 people show up,” boasted Adams. “And, we’ve increased attendee turnout at the event every year since. We like doing these types of events because it gives us the opportunity to show our Hispanic members how much we appreciate their loyalty and trust in us.”
On the internal front, Greater Iowa started the Employee Implementation Team (EIT) to help the credit union expand the Hispanic initiative from a marketing campaign to a company-wide program. According to Adams, the EIT has played a very important part in expanding Greater Iowa’s Hispanic efforts. This includes advocating necessary changes to the board, senior management and key staff. For example, at the recommendation of the EIT, Greater Iowa’s HR department became very instrumental in growing the credit union’s Hispanic opportunities. “They worked with our current staff to better understand how to serve Hispanic members,” said Adams, “as well as hired bilingual staff to build up our talent base. Today, 10 of our 85 employees are bilingual.”
The EIT also initiated a monthly email communication to all employees, updating them on current issues affecting the Hispanic community, as well as on the credit union’s relevant products, services and programs. In addition, the team publishes a regular newsletter that provides in-depth details on the “who, what, when, where and why” of the credit union’s efforts. “These communications are so critical in helping us keep the importance of the Hispanic initiative in front of all employees,” said Adams.
Through EIT encouragement, the credit union’s business and product development teams have become more involved with the initiative. According to Adams, each of these teams has recognized that in order to allow Hispanic immigrants to open a checking or savings account, apply for a loan or take advantage of the credit union’s other financial services, customer identification policies needed to adapt to include the matricula consulate cards.
Going one step further, Greater Iowa also decided to offer a credit builder lending program, for individuals with either a SSN or Individual Taxpayer Identification Number (ITIN), branded the Préstamo Camino al Crédito or Path to Credit Loan— one of the first in Iowa. “This was a very controversial decision for Greater Iowa,” said Adams. “We knew the program might not be profitable right away because of the high cost of service in delivering these small dollar loans, but we saw great potential for its future revenue opportunities. To implement, we had to get full buy-in and support from our board and executive staff, as well as overcome some regulation challenges under the Bank Secrecy Act (BSA). We also had to lobby the program in the communities we serve to convince Hispanics that we wanted to work with them and support their financial needs.”
Adams said that although the credit builder lending program took two years to implement, it became very popular in a short amount of time. To further help newer Hispanic members become more integrated into the U.S. financial system, Greater Iowa offers Spanish educational seminars on topics like building a credit history and how to use online banking services. The credit union recently rolled out Spanish online banking services, which include a mobile app that’s available in Spanish and allows members to view their balance and transfer funds from one account to the other, amongst other services. “The Hispanic community has been so appreciative of our efforts and personnel,” added Adams. “It’s become symbolic of our company’s approach to the Hispanic initiative.”
According to Adams, the results of these efforts have indicated the success of Greater Iowa’s Hispanic initiative. “We have seen a change in character of our entire membership base,” said Adams. “Of the nearly 29,000 members we serve in 31 Iowa counties, approximately 8 percent claim Hispanic heritage, and we continue to see 3 percent quarter-to-quarter growth.”
Adams concluded: “My advice to any credit union looking to court the Hispanic community is that the credit union needs both internal and external advocates, like its Board, senior leadership, staff, an EIT committee and partners such as Coopera, who understand the credit union’s vision and can continue to move the company’s Hispanic initiatives forward. These advocates are ideal resources for communicating with stakeholders, developing and nurturing relationships in the local communities and encouraging employees to follow best practices for successful implementation.”Leave a comment