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  • Growing Demographic Prompts New Outreach Initiatives

    Posted by on April 29, 2014

    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.

    At the time Ascentra Credit Union, headquartered in Bettendorf, Iowa, first attempted to reach out the Hispanic community, it had five branches, and of those, two were in cities that showed a Hispanic population growth rate higher than national averages. With corporate America already acknowledging the importance of tailoring its products and services to Hispanic consumers, Ascentra made the decision to follow suit.

    “Hispanics are a very loyal, extremely young and fast-growing population shaping the future direction of business and commerce in our country,” said Alvaro Macias, Ascentra community development coordinator. “Unfortunately, it’s a population that is largely underserved in the financial services industry. As Ascentra began to realize the influence and impact Hispanics will have in the future, we knew it was not only right to help reach out to this underserved segment but it was a good business decision for our credit union to focus on growing our outreach.”

    Ascentra took steps to make sure it’d be successful in its Hispanic outreach efforts. Management initially asked three bilingual employees for ideas on how to reach this segment of the population. Some advertising was purchased and small events that catered to the Hispanic population were sponsored, but there was no formal Hispanic outreach plan or goal.

    Then, they hired Coopera, a leading expert in credit union service to Hispanics, to conduct a member analysis of their operations areas, as well as to provide guidance on Ascentra’s initiatives. These initiatives included things like product and services development and marketing campaign implementation. Coopera was also instrumental in training Ascentra’s staff on the credit union industry’s changing laws and regulations impacting service to Hispanic members.

    The credit union then created Macias’ position in the company to make sure the credit union was focused on building a solid foundation in the Hispanic community.  According to Macias, Ascentra also added more bilingual staff to the credit union, as well as translated a page on its website into Spanish. Today, 18 out of the credit union’s 123 employees are bilingual. And, the webpage www.ascentra.org/espanol includes the names, pictures and contact information for all bilingual lending officers and call center representatives within the company.

    Ascentra formalized its Hispanic Outreach Program initiative, as well as created two advisory councils, one made up of staff members and another with local community members to provide input and insight into the credit union’s and the competitions’ efforts.

    “Ascentra’s initial efforts with a formal plan may have started out as more of a business development initiative for the credit union,” said Macias. “But, most recently when the member analysis from Coopera showed that 63 percent of our new member growth in 2011-2012 was from the Hispanic segment, it confirmed in some of our minds that targeting this group was a key credit union-wide growth strategy.”

    To better serve Hispanics’ unique financial needs, Ascentra has introduced several products and services tailored for this underserved demographic. These efforts included money wire services to Mexico, ITIN lending and Quinceañera loans. The credit union also launched its suite of “Préstamos Para Mi” or “Loans for Me”, which is a small signature loan product that is marketed as a way to  pay for life events, such as applying for citizenship, traveling to home countries and making large purchases like furniture or electronics.

    From a marketing perspective, the credit union also made some changes to its campaigns to better target potential Hispanic members. “We cut out billboard advertising, as its reach and messaging was too broad. We didn’t want to convey to prospective members that our membership was exclusive to Hispanics,” said Macias. “Also, we started listing some of Ascentra’s bilingual loan officers’ names and contact information in our advertisements so new-member prospects could call them directly. Our team started getting calls right away.”

    Other marketing efforts consisted of bilingual advertising, collateral and branch signage. Macias explained, “Our advertising efforts included a mix of local Spanish/English newspapers, a college radio station that has Spanish programing several times a week and a TV commercial during a Hispanic show on a local TV station. We also began offering Spanish marketing collateral for Ascentra’s products and services, as well as have signage in our branches to announce to visitors that we accept matricula cards as a form of ID to open accounts or obtain loans.”

    A big push in Ascentra’s Hispanic Outreach Program was to get more involved in its local communities. According to Macias, the credit union has become involved in the Mexican consulate’s mobile visits — events to help Mexican nationals living here obtain matricula cards and passports. At these events, Ascentra staff is on hand to talk about attendees’ financial needs, as well as to invite them to stop by the credit union to open accounts, obtain loans or plan for their futures.

    Macias said the member response to these efforts has been phenomenal as after every event the last 2 years, people came to open accounts or obtain loans. “Hispanic members love that they can talk with someone in Spanish who understands their needs and can explain how Ascentra can help them,” said Macias. “But, it’s definitely about more than language. Our staff goes above and beyond to make each of our members feel welcome and valued.”

    Ascentra is also a supporter of the Greater Quad Cities Hispanic Chamber of Commerce and was recently recognized by the Chamber as Corporation of the Year. Macias serves as a board member on the Greater Quad Cities Hispanic Chamber of Commerce and chairs the events and program committee. As part of his Community Development Coordinator role, Macias also has conducted financial education seminars on budgeting and planning, as well as building credit, in both English and Spanish at a local church and at a Casa Quad Cities event.

    The results of these efforts demonstrate that Ascentra is on the right track with its Hispanic Outreach Program. In 2012, for example, the credit union processed 89 ITIN loan applications, resulting in 59 loans. These were all small loans under $2,500 which were generally used for consolidation, credit building, and “to get by.”  Sixteen of those loan recipients became credit card members as well. Macias offered additional proof: “As of last October 2012, 7.7 percent of our membership is calculated to be of Hispanic heritage,” said Macias.

    Macias added these final thoughts, “For credit unions interested in adding more Hispanics to their membership base, my advice is to perform solid due diligence to understand the culture and specific financial needs of this important segment. Embrace what you learn and make any necessary changes to your credit union’s culture to accommodate these members. It is so important that you go to them — don’t expect them to come to you. This includes being at events in the Hispanic community, talking with the people there and being genuine in your efforts to show them that you care.”

    “Although Hispanic outreach efforts can take a long time to implement and yield measurable results, know it’s a marathon, not a sprint,” Macias concluded. “Overtime, the rewards become worth every bit of the effort.”

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    Bridging a Cultural Custom with the Credit Union Experience

    Posted by on April 15, 2014

    For many immigrants, particularly Latinos, using tandas is a way of life.

    Also known as cundinas, sans or quinelas, tandas are informal borrowing and lending circles that provide an alternative to a traditional savings account and a loan from a financial institution. Quite simply, tandas allow for a short-term, no-interest loan and savings account among friends and family.

    Growing up in California and Iowa, my parents participated in tandas with their friends, co-workers and neighbors. Before they established accounts at financial institutions (and even a few times after), my parents turned to tandas to save and borrow money outside of the financial mainstream.

    Tandas typically work in the same fashion — a group of people already acquainted with one another collect money to help each other financially. A leader, whom is acquainted with tandas, gets the group together and is responsible for collecting, holding and distributing the money. The leader usually sets the rules aimed at benefiting the entire group, including the amount of money collected, when the money will be collected and the number of people in the group. Once these parameters are established, the leader randomly chooses the order of whom is going to receive the money. Most often, tandas distribute money through a raffle or make the decision based on the individual(s) believed to need the money most.

    Here’s an example of how a traditional tanda could work: The tanda is formed with 10 friends and family. Each member contributes $100 every two weeks to the group leader. At the end of the month, one participant gets the “pot” of $2,000. This process continues until each member has received the pot.

    The tanda played a very important role in my family life. Each time that my parents borrowed from the tanda, the money was earmarked for specific expenses, such as furniture for our first house, immigration expenses as we were going through the process of adjusting our status in the U.S. or trips to Mexico to visit family.

    I remember taking turns going with either my mother or my father to the tanda group leader’s house when we moved to Iowa. She was a neighbor — someone everyone in the Latino community knew and trusted. The tanda leader was also an entrepreneur. She sold jewelry and home interior products to the community, which my parents also bought from her. My parents would give her their $100 payment in cash, usually after my father got his paycheck cashed from work. The tanda leader would then store the cash in a little cash box in her office desk and would note my parent’s payment in a notebook.

    I also witnessed my parents pulling a number from a box, letting them know when it would be their turn to receive the lump sum from the tanda.

    When I was a teenager, my parents began to entrust me with delivering the $100 payments. As the oldest child in my family, this was a big responsibility but seemed very simple to do. Throughout my childhood, I did not realize that there was an alternative to saving and borrowing money at a traditional financial institution because I was used to seeing my parents cash their checks, borrow and save completely outside of the financial mainstream.

    Tandas were convenient, they involved people that we knew and trusted, and they helped my family out financially when we needed it.

    Although very small in nature, tandas are making big headlines. NPR’s Changing Lives of Women series and Code Switch have each covered the topic in recent months. The article, Lending Circles Help Latinas Pay Bills and Invest, is one example. Modern tandas are aiming to bridge a cultural custom with the credit union experience.

    To leverage the benefits and emotional, cultural and community connections of the tanda on a larger scale, Coopera worked with Travis Credit Union (TCU) based in Vacaville, Calif. through a grant from the National Credit Union Foundation, to create the modern version of a tandas — the New Era Tanda Program. This program was specifically designed to bring the concept of the tanda to the credit union, where people helping people is the organization’s primary mission.

    In addition to supporting Latino families save and borrow, the program helps individuals open accounts, build a credit history and receive financial education.

    Participants in the program contribute on a monthly basis to a shared savings account and also receive a group share-secured loan to help save for a down-payment on a vehicle. After satisfactory completion of the program, each participant is eligible for a TCU credit-building credit card and/or auto loan. The program uses a grassroots and culturally relevant approach tailored to the local Latino community.

    TCU’s program is just one example of how tandas can work in the mainstream financial system. Through modern tandas, credit unions of any size and in any location can realize tremendous opportunity to engage with the Latino community, as well as to bridge cultural traditions and customs with good financial alternatives.

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