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  • Finding Creative and Relevant Ways to Encourage Saving

    Posted by on December 18, 2017

    On a recent Freakonomics podcast episode, Is America Ready for a No-Lose Lottery, a professor at the Saïd School of Business specializing in consumer finance shared some interesting insights about consumers’ savings habits (or lack thereof). He surveyed nearly 10,000 people to see if they could come up with $2,000 in 30 days.

    “Why $2,000?” Tufano asked. “Because an auto transmission is about $1,500. Most estimates of everyday emergencies are about that order of magnitude… And then, why this language ‘come up with’ as opposed to ‘save?’ Because we wanted to see if people had access to resources between savings, credit, friends and family.

    What he found was that nearly half of Americans are not able to come up with $2,000 in 30 days. That means they are just one emergency or crisis away from dire circumstances.

    The study highlights the need for credit unions to encourage their members to save, really save. A number of financial services providers are finding creative ways to do just that by adapting to consumer behaviors, particularly those of low-income communities. Below are a couple examples.

    Prize-Linked Savings

    Twenty states currently allow prize-linked savings accounts as a way to encourage their residents to save. With this model, consumers deposit money in an account with an understanding they won’t receive interest on their deposits. Instead, the interest of all participants is pooled together and awarded as a large cash-based prize.

    This type of account appeals to certain segments of the population because of a phenomenon economists call “skewness.” Skewness is the idea that despite really poor odds, there is an almost irresistible appeal to the idea that with a low upfront investment, one big win could change your life. This phenomenon is illustrated by the nearly $60 billion Americans spend on lottery tickets every year.

    Prize-linked savings does carry a few roadblocks and concerns – namely, such a product is not yet legal in every state. Also, the product may be difficult for consumers to understand, particularly for underserved populations who may not even be familiar with the role of traditional financial institutions.

    However, if we can overcome those barriers, it may be an interesting product. As Freakonomics host Stephen Dubner said, “In a country where it’s easy to borrow your way to bankruptcy, where you can buy lottery tickets anytime you buy a loaf of bread, prize-linked savings is like a big neon billboard that turns a boring old savings account into an exaggeration of itself. Stick some money in here, it says, and you just might hit a big payday. And even if you don’t — well, your money still belongs to you.”

    Next-Generation Tandas

    Tanda is a Spanish term used to describe a savings and lending circle among family and friends that helps people reach financial goals. With more than 200 different names that vary from country to country, the concept of an “informal loan club” has been around for hundreds of years.

    Here’s an example of how it works: 10 friends and family members form a tanda. Each member gives $100 every week to the group’s organizer. At the end of 10 weeks, one participant gets the payout of $1,000. This continues until each member has received the payout. By working in a group in which others are counting on them, participants have motivation to stick with the plan. Tandas are particularly popular in Hispanic and immigrant communities in which a high level of value is placed on mutual trust among family and friends.

    To appeal to today’s increasing digital consumers, organizations such as eMoneyPool and PayPal are bringing the concept of a tanda into the digital world.

    eMoneyPool is a sharing community that operates much like a tanda except anyone can join in less than five minutes using a connected device. Unlike a traditional tanda that only includes family members and close friends, eMoneyPool offers a marketplace where participants can take part in a pool anytime with people from across the country. This means there will always be a pool available to meet their needs. With PayPal Money Pools, participants can create a page that lets others easily chip in for group gifts, special events and more.

    Whether prize-linked savings or next-generation tandas are the right path forward for your credit union, one thing is clear: There exists a real need among consumers, and particularly among Hispanics and other underserved communities, for creative and relevant savings options.

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    Get to Know Tania Perez

    Posted by on December 11, 2017

    Continuing our get-to-know series, this blog post features Tania Perez, client support specialist for Coopera.

    How did you end up working for a company focused on helping credit unions serve the Hispanic market?

    As a Latina, I have always wanted to work in a position where I would be able to help my community. When my friend reached out to me about this position, I didn’t hesitate to apply. Credit unions care about their members, and working for a company that works with credit unions to serve the Hispanic community is not only remarkable; it’s something that really stood out to me.

    What gets you out of bed in the morning?

    My family. I have always strived to make my parents proud. They have done so much for me, more than I will ever be able to repay them for. I also want to be a good role model for my younger brother. I want to show him that happiness comes in the form of doing what you love and that anything is possible.

    What does your typical day look like?

    In my role, I ensure Coopera’s products and services are properly delivered and fulfilled. This includes assessing and reporting, consulting, training, marketing and translating. Still being new to the Coopera family, I am learning a lot about the company, our clients… and plenty of acronyms!

    What’s the best business advice you’ve ever received?

    Never be afraid to speak up. Communication is key to making sure everything runs smoothly in a workplace. Whether it’s a complaint or an idea you have to improve something, always speak up and express yourself.

    What excites you the most about the future of financial services in the Hispanic market?

    Everything! With the Hispanic market growing, I see a lot of opportunity for the community to have more access to products and services that would help them financially. These are complex topics, and knowing that things will be more accessible to the community is exciting.

    Where do you go/what do you do to get inspiration?

    I’m proud to say I tend to get my inspiration from friends and mentors. I am lucky to be surrounded by individuals who are striving to be the best they can be. I have friends who are in the process of taking the LSAT, applying to the Peace Corps, studying to be nurses and serving as activists for the community. Mentors from school or previous employers have also been extremely helpful and continue to show they care about my future. All these individuals inspire and truly motivate me to be the best I can be every day.

    What is something unique about you most people wouldn’t know?

    I love doing activities that involve a huge amount of adrenaline. For example, I have participated in bungee jumping, canyon swinging, zip-lining and rappelling. My parents tell me I was never afraid of heights as a child, so they think that’s where it comes from. Paragliding is next on my list!

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    Connecting with Hispanics in Your Community This Holiday Season

    Posted by on December 2, 2017

    As in most cultures, shopping and gift-giving are important parts of the holiday season for many Hispanics. According to recent research by ThinkNow Retail, 33 percent of Hispanics say they will be spending more this holiday season than they did last year, compared to 30 percent across all markets. Some other interesting findings from the study include:

    –About 41 percent of Hispanics plan to pay for most of their holiday purchases with a debit card, higher than any other market. Cash and credit tie for second among Hispanics at 24 percent each.

    –Smartphones will be the most commonly used device for making online holiday purchases among Hispanics. About 62 percent of Hispanics will use a smartphone, compared to 50 percent across all markets. Laptops, on the other hand, will be the device used the most overall across all markets.

    –On average, Hispanics plan to buy about 35 percent of their holiday purchases online and about 46 percent in-store.

    For credit unions serving Hispanic communities, it’s important to understand holiday purchasing behaviors to better tailor marketing offers, as well as products and services. Even more important, however, is the understanding of specific motivations. That level of intelligence allows your teams to create a deeper connection between the credit union and its community.

    In the Hispanic culture, most holidays have their origins in religion, specifically Christianity. Approximately 77 percent of Hispanics are Christians, with the overwhelming majority identifying as Catholic.

    As such, Christmas is one of the most popular Hispanic holidays, and there are many traditions associated with it. Here are a few favorites:

    Tamale-making parties – Tamales are holiday staples in many parts of Latin America. Because making tamales is a time-consuming task, many people participate in tamaladas, where participants bond over recipe swaps and bulk prep of the holiday favorite.

    Christmas Eve feastNochebuena is a very special celebration shared with family and close friends on Christmas Eve. Food plays an important role during this celebration. Each country, and even certain regions within a specific Latin American country, has a special dish.

    Re-enactments and plays – Posadas are re-enactments of Mary and Joseph looking for a place to stay before Jesus was born. Many posadas start at church services. Las pastorelas are plays that retell the Christmas story.

    It’s clear religion and family are at the heart of the Hispanic holiday experience. Whether it’s partnering with a local community center or church to support a tamalada or posada, having a drawing for a pork roast, a common centerpiece of the Nochebuena meal, or simply sharing holiday family fun ideas on your website and social media channels, there are a variety of ways credit unions can connect with Hispanics in their communities this holiday season.

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