Financial inclusivity as a growth strategy is quickly gaining traction in the community banking space. In fact, the trend recently garnered the attention of the hugely popular, national financial advice site Nerd Wallet.
Writer Juan Castillo reported:
Hispanics in the U.S. have long been known as “the sleeping giant” for their potential as a substantial and still-growing voting bloc. Now, some in the financial services industry are getting serious about targeting Hispanics — and Hispanic millennials in particular — as a prime source for market growth.
As the concept of reaching out to fast-growing markets like the Hispanic segment earns wider interest, it will be important for financial institutions to adhere to the fundamentals before going “all-in.” This will prevent staff from viewing the strategy as a fad and help them to see it as a part of the financial institution’s long-term plan.
There are essential first steps that must be taken on the front-end of any financial inclusion strategy, particularly when the credit union or community bank is targeting a segment of people new to mainstream banking.
Step One: Build the Right Organizational Mentality
Financial institution leaders must communicate the philosophical and business imperatives of serving a new market to build buy-in at all levels of the organization from frontline staff and management to board members and C-suite executives.
Step Two: Adapt to the Market
Do not expect the people you want to serve to adapt to you. Develop a comprehensive plan for how you will improve processes and products, as well as train employees and prepare your branches.
Step Three: Create a Strategic Plan
Define your opportunities and challenges with an eye to your specific local communities. What does the market look like in your city? Are there nuances across age, geography, acculturation factors? Create a roadmap encompassing groundwork, personnel training, product adaptation/development, processes and marketing. Set ongoing measurements and continue to nurture that all-important staff buy-in with frequent updates on milestones and wins.Leave a comment
Something was changing in the community. The staff of Milwaukee’s Prime Financial Credit Union (PFCU) could feel it. More visitors to the 90-year-old cooperative were asking for Spanish translators and fewer came equipped with the basics of U.S. financial system awareness.
“It got to the point where it was a topic of conversation at every meeting,” said Colleen Jakubowski, PFCU’s chief operating officer. “We knew there was a Hispanic community here. But we didn’t know how large it was, nor how underserved many of the members of that community were.”
Her colleague, PFCU Director of Organizational Development Amy Goratowski, agreed: “Over the years, we had noticed less volume in our branches. It became clear we needed to devote a location to the Hispanic community – somewhere they would feel immediately welcome and comfortable. We’re excited to be breaking ground on that branch as we speak.”
Talk with Jakubowski and Goratowski and you can feel their excitement about the future of Hispanic membership growth at PFCU. The pair have a self-described justice mentality that has intrinsically motivated them to pursue improvements in the way the cooperative serves this influential and growing segment of Milwaukee – a city that saw its Hispanic numbers rise nearly 175 percent from 1990 to 2014. “We really get excited by the prospect of making things better for people,” said Jakubowski. “It’s what we like to do.”
Rich Experience Adapting Products and Services
Because the credit union serves a high percentage (70 percent) of members who reside in low-income neighborhoods, there is rich experience adapting products, training employees and making community connections already within PFCU. Jakubowski and Goratowski believe these competencies are helping them achieve early success in their Hispanic membership growth plan. “By serving segments that need special assistance or special products, we are actually getting back to our roots,” said Jakubowski. “Bigger financial institutions are about making money. That’s not us. We’re about reaching those people that need us most.”
Getting back to the credit union’s roots was an objective that came after a lot of soul searching. The only Wisconsin credit union to survive conservatorship, PFCU emerged ready to recommit to the right people. “We took a hard look at everything we were doing,” said Jakubowski, who noted the credit union is fully staffed at 55 with four active branches and a strong net worth. “What we discovered is we were doing a better job chasing people who maybe didn’t need us rather than serving those who did. These were the people we saw every day.”
Among the discoveries made during what Jakubowski calls the “enlightening period” was that many of the credit union’s most loyal members were not taking advantage of beneficial products, such as low-rate credit cards or fee-free checking accounts. As a result, leadership began to seek out grants and designations that could help them execute on their reignited mission to help community members become and stay financially healthy. They achieved a low-income designation from the NCUA, which has allowed them freedom to pursue new objectives, such as those inside the Hispanic membership growth plan.
Products Designed to Build Credit Histories
Many of the products and services already on the PFCU roadmap are ideal for the local Hispanic community, Coopera research has found. Payday loans, for example, are providing a much-need service as new regulatory requirements are expected to shutter some payday lending businesses. A responsible lender, the credit union will only allow one loan at a time, and each loan will be capped at $500. Because the credit union reports on these loans to the credit bureaus, members who take advantage of the product will be building credit histories, an important step to establishing financial wellness.
PFCU’s credit rebuilder account, too, is a great match for many unbanked people in Milwaukee. Members can open the account immediately with zero deposit down, and there is no minimum balance. A portion of the funds goes to pay off debts, which helps members increase their credit scores. The credit union also offers certificates for as low as $250 and other loans for as low as $500.
To learn more about the strategic evolution of PFCU’s Hispanic membership growth strategy, download “Hispanic Member Growth Not Just for ‘Gateway States’ Anymore.”Leave a comment