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  • Target Market: Underserved Hispanics

    Posted by on June 4, 2013

    More than one in four households (28.3 percent) in the U.S. today is underserved, conducting all or some of their financial transactions outside of the mainstream banking system. And, Hispanics represent a disproportionate number of this group. While at first glance, the pursuit of this market for potential members may seem counterintuitive for a credit union, the underserved represent a large market opportunity. That’s because underserved Americans are a fast-growing and young population with growing incomes.

    There are nearly 7 million Hispanic households in the U.S. that are unbanked and underserved, which means that about one out of every two U.S. Hispanics is unbanked or underserved. The most common reasons why households (regardless of ethnicity) report they do not have bank accounts are that they feel they do not have enough money for an account or they do not need or want one.

    Yet, nearly 70 percent of unbanked households have used an alternative financial service provider in the last year to conduct financial transactions outside of a traditional financial institution such as cash their check or buy money orders.

    For the credit union that supports such an individual through a difficult time, the potential for life-long loyalty is huge. Underserved Hispanics, in particular, tend to have large households and live in tight-knit communities, creating more word-of-mouth opportunities for the credit union that serves them well.  The Hispanic culture relies heavily on the experiences of friends and family members to guide decisions and choices. So when a credit union serves one Hispanic member well and provides financial information and guidance to that member, the cooperative can receive several more opportunities to help friends or family members.

    For many credit unions, the best marketing tactics possible for reaching the unbanked will be financial education outreach and word-of-mouth referrals. With these methods, the credit union can begin to build awareness about the benefits of depositing and borrowing from a federally insured financial cooperative, as well as the credit union difference.

    This blog is an excerpt from the new Coopera white paper, “The Multifaceted Hispanic Market,” available for download at http://tinyurl.com/c8jwf45.

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