Relationship marketing, the pursuit of long-term engagement rather than short-term sales, has been called a game-changing marketing trend for 2016. Credit union leaders may find that a bit amusing, given “relationship marketing” is less of a trend, more a way of life, within the movement.
What more credit unions are learning, however, is this deeply rooted competency for relationship building is better suited to some consumer segments than to others. As certain financial products become commodities for some individuals, they remain coveted, potentially life-changing, services for others.
Take Kenia Calderon, for example. The 21-year-old El Salvador native has been in the U.S. for nearly 10 years. After what she describes as a bad experience with a major U.S. bank, she watched her parents pull out of the U.S. financial system altogether. Today, the double-major university student and president of her school’s Latino student group manages her entire family’s finances with the help of Village Credit Union in Des Moines, Iowa.
“Serving the Latino community is hot these days,” said Calderon. “But for most big companies, that’s because they see dollar signs. My credit union put humanity ahead of profit. By helping me and my family better our lives, they have impacted generations to come. It’s a domino effect. In my family alone, we will have three college graduates leaving school debt-free thanks to the help of Village Credit Union.”
Earning the business of more Millennials like Calderon – the second largest Hispanic demographic in the country – may require a new way of thinking for U.S. industry. For credit unions, though, it’s about getting back to the basics of building mutually beneficial relationships, albeit with a twist.
Young Hispanic consumers have some unique, and somewhat conflicting, tastes. For instance:
For more on each of the above, see our article in the December issue of Credit Union Business.Leave a comment
Last week, I had the pleasure of serving as a panelist during a nationally-televised event. Hosted by the National Credit Union Administration (NCUA), the event brought together several credit union industry leaders to discuss strategies for improving financial service to Hispanic consumers. Rounding out the panel were Maria Martinez, president and chief executive officer of Border Federal Credit Union and co-chair of the Network of Latino Credit Unions and Professionals; Robert Peterson, president and chief executive officer of One Source Federal Credit Union;and Sergio Osuna, a supervisory examiner with NCUA’s Region V office.
Before both a live and a streaming audience of more than 200 individuals, I had the opportunity to share some of my own family’s story to illustrate the challenges credit unions may face as they look to execute financial inclusion strategies.
First Build Trust
Among the issues we discussed is unbanked, first-generation Hispanics simply aren’t being courted by traditional financial institutions. My family and I belonged to this group. My parents were intimidated by banks. We came from Mexico, and like many other Latin American countries, banks there tended to cater only to the wealthy.
My parents were used to dealing in cash, so that’s what made sense when we came to the U.S. Others in our community only used check-cashers and paid bills with money orders. They obtained these services from providers that asked few questions, were open around the clock and had personnel that spoke Spanish and shared similar backgrounds.
Another element we discussed during the event is that credit unions looking to serve this young, influential and fast-growing consumer segment to first build trust. Show the community you not only want their business, but that you are willing to invest in the success of the community. Employ people like those you want to serve; elevate them to board and other leadership positions; get involved in local groups, organizations and agencies that exist to better the lives of Hispanic people.
Chose the Right Products & Services
As for products and services credit unions should consider adding to better serve unbanked, first-generation Hispanic consumers, consider the following:
Adapt Account Opening Requirements. It’s important for credit unions to accept alternative forms of ID and documentation like the matricula consular and Individual Taxpayer Identification Number (ITIN), and to determine credit worthiness via alternative methods for those without credit.
Deferred Action for Childhood Arrivals (DACA) loans. These are young people seeking to further their education, buy homes, apply for credit cards, start businesses. The DACA application fee, however, can be out of reach, especially when multiple family members are going through the process at the same time.
Immigration loans. Three individuals in my family went through the process at the same time, which forced us to borrow from friends and family to pay for the fees. In some cases, we had to wait to file the applications until we had the money.
Know the Business Case
Importantly, we discussed during the NCUA event that there is a strong business case for serving Hispanic communities. To drive this home, I shared some of the results of a 2014 national study Coopera conducted in partnership with the Credit Union National Association (CUNA). The study examined the overall membership growth and financial performance of 86 credit unions across the country, each of which had implemented a Hispanic growth strategy. Among these credit unions:
Overall membership growth accelerated by 3 percentage points from pre to post program implementation, from 2 to 5 percent.
Loan growth accelerated from 5 to nearly 9 percent in the third year after implementation of the program, and loan delinquency was practically negligent changing from 1.5 to 1.52 percent.Leave a comment