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. Hispanics represent a disproportionate number of this group — in fact, there are nearly 7 million Hispanic households in the U.S. that are underserved. This means that about one out of every two U.S. Hispanics falls into this classification.*
Because of the U.S. Hispanic market’s sheer size, youth and rate of growth, it represents a large market opportunity for credit unions. Creating products and services to specifically meet the needs of underserved Hispanic consumers can give your credit union a significant competitive advantage in 2014.
When it comes to attracting Hispanic consumers — underserved or not — one-size-fits-all financial products and services don’t work. As your member base continues to diversify, it is unrealistic for you to expect the Hispanic community to conform to your products and services — it’s got to be the other way around. Therefore, if your credit union is looking to attract more Hispanic members in 2014, you need to plan now to provide fair, dignified and tailored financial services.
Fortunately, there are many products offered by credit unions across the country that have been created with the Hispanic consumer in mind and are a good fit for the Hispanic market. The products include culturally relevant savings programs, prepaid reloadable card; auto, micro and lifestyle loans (for quinceañeras, weddings, immigration, citizenship, travel, etc.) and financial education. If you don’t already have these products in your portfolio, now is the time to add them.
And, even more products are on the horizon. the Filene Research Institute, is currently testing four products to benefit underserved consumers, including Hispanics, in its new financial services incubator.
Here’s a quick synopsis of these products:
-Non-prime Auto Lending from the National Credit Union Foundation. This program helps lenders fairly price and manage non-prime auto loans, incorporating the Lower Interest For Timeliness (LIFT) idea introduced by Filene’s i3 innovation team. LIFT is a loan feature that reduces interest rates when members make on-time payments.
-Borrow and Save from the National Federation of Community Development Credit Unions. This product increases consumers’ economic security by providing an affordable small-dollar loan with a payment term that makes sense for them. A built-in savings component also helps consumers self-fund their emergencies instead of borrowing money to handle them.
-Pay Yourself Back from Innovations in Poverty Action. As an add-on to any loan type, this product seamlessly converts borrowers into savers. Leveraging the habits formed by regularly making loan payments, it encourages consumers to keep making regular payments (or a portion of them) to themselves after the loan is paid off.
-Employer Sponsored Income, Advance Loan from North Country Federal Credit Union. This small-dollar loan program is offered to employees of select employer groups (SEGs) partnered with credit unions. Loan payments are auto-deducted from direct-deposited paychecks. Once the loan is paid, employees may continue making payments into savings accounts.
At Coopera, we see a lot of potential in these products for Hispanic consumers. We have found that many Hispanic consumers aren’t aware of what financial services are accessible to them, as well as struggle with basic financial education around money management and building/maintaining credit. These new products from Filene could help address these gaps and guide underserved Hispanics on a path to achieve their financial goals. We will keep you posted on how the testing phase of these products goes, as well as the potential for implementing them into your current product mix.
*For more information about the demographics of Hispanic consumers, download the Coopera white paper “The Multifaceted Hispanic Market” at http://tinyurl.com/c8jwf45.Leave a comment
With 40 percent of its local market claiming Hispanic heritage, the growth path of People’s Trust Federal Credit Union, headquartered in Houston, Texas, was pretty clear: It would be critical to make a strategic investment in expanding the credit union’s Hispanic outreach efforts.
In 2008, People’s Trust began advertising on Spanish television network Telemundo. After a couple of years, however, that effort was put on hold. The People’s Trust leadership team challenged the staff to better understand how the credit union could serve its current and future Hispanic members before advertising. “Our Sr. Management asked us some really tough questions to get us thinking more strategically about our outreach efforts, including how we were internally supporting these members,” said Patsy Jalomo, People’s Trust marketing manager. “We realized that we were not prepared to tackle this alone, and that we needed help from people who have expertise in the Hispanic market.”
Through its relationship with the Cornerstone Credit Union League, People’s Trust was referred to Coopera, and a partnership between the two companies was formed. In February 2013, Coopera conducted a Hispanic Opportunity Navigator (HON) of the local Houston market for People’s Trust, and according to Jalomo, the results were a real eye-opener for the credit union.
“The HON confirmed what our Sr. Management team suspected, specifically that we were not as prepared to serve the Hispanic market as we needed to be,” said Jalomo. “We had the bilingual staff to support our initiatives, but we were missing other basics, like bilingual marketing collateral and documents. We also realized we need to take a closer look at our product portfolio to determine if we had the right mix to meet the financial needs of our Hispanic consumers.
“The HON research highlighted where our opportunities were and where we needed to focus our attention,” said Jalomo.
With more to accomplish before the credit union could expect to successfully reach the Hispanic market, People’s Trust made the decision to slow the pace of implementation and follow the direction recommended by the HON. “The HON really made our discovery process much simpler,” said Jalomo. “Coopera did an excellent job of really looking into the data, understanding it and giving us a solid recommendation of how to move forward.”
Following Coopera’s guidance, People’s Trust used the results of the HON to quickly classify its primary and secondary markets in the local Hispanic community. The credit union also identified its goals for the Hispanic outreach initiative, including membership and loan volume growth, as well as increasing the credit union’s products-per-member ratio — extensions of the credit union’s overall strategic growth goals.
From there, the credit union put together an internal task force, composed of staff from each of the credit union’s departments, to work closely with its outreach implementation team to identify tasks, set timelines, assign roles and responsibilities, as well as host strategic planning sessions and manage expectations. “The big question from our staff and our leadership teams has been ‘How soon can we get things in process and completed,’” said Jalomo. “With our task force and implementation teams now working so closely together, we anticipate needing 4 to 6 months to get everything in place and formally launching our efforts in June (2014).”
Although slowing down the Hispanic outreach process may, at first, have seemed counter-intuitive to the credit union’s growth goals, Jalomo confirmed it’s been the right decision. “Hispanic outreach is definitely a priority for People’s Trust,” said Jalomo. “Yet, we don’t want to make it too urgent that we miss the strategic intent. There is a lot to do, and we want to do it right.
“Targeting Hispanics is not a quick fix to our membership growth goals,” finished Jalomo. “It’s a long process that requires a lot of patience and investment in time and effort, and we’re committed to its success.”Leave a comment