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
More credit union people than ever before are talking about Juntos Avanzamos, the national designation awarded to U.S. credit unions making a strategic effort to serve the Hispanic community. The designation was initially developed by the Cornerstone Credit Union League in the states of Texas, Arkansas and Oklahoma and has now been rolled out nationally by the National Federation of Community Development Credit Unions (Federation).
A big reason for all the chatter is the program’s explosive growth. Just 15 months after the program went national, 32 more credit unions in 15 states have earned the designation. By the end of 2017, the program is expected to reach 100 credit unions in 20 states.
Coopera, along with many national league partners and the Federation, recently celebrated this growth at the Consulate General of Mexico in Dallas, Texas. It was a spirited evening organized by the Federation and the Consulate during which passionate credit union folks all came together to recognize the connections being built between credit unions and the youngest and fastest-growing consumer segment in the U.S.
The event was part of CUNA’s Community Credit Union Conference and the Federation’s Annual Conference, at which I was also honored to sit on a panel with Francisco de la Torre Galindo, General Consul, Mexico General Consulate. Before an audience of credit unions from across the country (many of which were CDFI certified or low-income designated), we talked about the growing network of Juntos Avanzamos credit unions. Among the specifics we discussed were…
How credit unions can partner with the Mexican Consulate to further provide accessible financial services to Mexican nationals.
The various resources offered by the Mexican Consulate to Mexican nationals.
The demographics of the market and how Hispanics continue to be one of the largest, fastest-growing, youngest and most financially untapped markets in the U.S.
Overcoming common concerns related to opening accounts for foreign nationals and offering loans to individuals with individual taxpayer identification numbers (ITINs).
How to develop a strategy to serve the Hispanic community for those that are looking to expand into this market. Success stories of Juntos Avanzamos-designated credit unions.
We are committed to keeping the Juntos Avanzamos ball rolling. We will continue the conversation at a special roundtable at CUNA’s GAC Conference on February 28, 2017 (more details soon). Please also remember the Network of Latino Credit Unions and Professionals (NLCUP) is hosting its annual network reception at the National Press Club from noon to 2:00 p.m. that same day. Juntos Avanzamos will have a big spotlight shone at it at our industry’s most important conference!
Visit the Federation’s website for more information about the Juntos Avanzamos designation.Leave a comment
Another Hispanic Heritage Month (HHM) is in the books, and we couldn’t be more proud of the reaction our colleagues and friends had to our multi-company celebration.
To inspire more of the people we work alongside each day to learn about and engage with the vibrant Hispanic culture in the U.S., Coopera, along with our Affiliates Management Company (AMC) sister companies, invited associates to participate.
People of all ages and cultures took advantage of Coopera’s artifacts showcase, and of course, an on-site food truck. It was an absolute blast, not to mention a great honor to play even a small role in exposing more individuals to the vivacious, live-life-to-the-fullest outlook of Hispanic people.
Tacos Jalisco came on site to allow AMC employees a chance to try authentic foods from Latin America.
During the celebration, Coopera’s Kenia Calderon shared, among other items, a cross depicting Father Romero, a hero of the Salvadorian people who spoke out against poverty and social injustice.
For my part, I displayed a gift given to me by the mother of my goddaughter in Havana, Cuba.
It was so important to have the support of our senior leadership, as well as the logistical help and excitement of our human resources team. A big thanks goes out to everyone who was so instrumental in organizing our HHM activities!
Undoubtedly, many of you had the opportunity to host or participate in your own HHM efforts, and we would love to hear about them. Or maybe you have an idea for how you will celebrate during HHM next year (scheduled for Sept. 15 through Oct. 15, 2017)! Either way, drop us a note in the comments section.
Leave a comment
Today, one in six consumers is Hispanic. By 2030, it’s anticipated that statistic will rise to one in three. This rapid growth is one of several potentially disruptive trends creating a need for businesses of all types to shift how they think about serving multicultural consumers.
As the buying power of the Hispanic market alone eclipses $1.2 trillion annually, marketers and other strategists are working diligently to attract this influential segment to their brands. Consider U.S. financial and insurance companies like Wells Fargo, JPMorgan Chase and Nationwide. In 2014, this business category spent a total of $352 million on Hispanic media. It’s clear these brands understand the value of the Hispanic market and are investing in smart segmentation strategies to make the most of its potential.
Beyond the Hispanic market, however, we see other cultures beginning to emerge as important to U.S. business. Many kinds of businesses are adopting a total market strategy in which multicultural segments are incorporated under a comprehensive consumer plan. Examples include Coca Cola and Western Union. Each has created diverse language communications, based on a genuine understanding of the cultural nuances within their vast and diverse marketplaces. Each of these brands works hard to position its products and services as vital to the happy lives of global consumers.
Marketers and other leaders recognize that emerging multicultural markets are best served by strategies that go far beyond merely translating communications. That’s because multicultural consumers are insightful; they are also not afraid to turn away from brands that don’t “get it.” They will easily ignore products and services they don’t believe genuinely embrace their essence.
For financial institutions in particular, payments products lend themselves well to a multicultural strategy. In fact, the topic was one I had the pleasure of discussing with financial institutions at this year’s TMG Executive Summit during the Future of Payments Panel session. Here’s a look at a few trending payment options and some insight about their prevalence among the Hispanic population specifically.
The perception that “debit cards are dead” couldn’t be further from true among Hispanics. They are a prime target market for debit products.
From 1992 to 2012, debit cards were the first overall choice among consumers. And while that’s changed for non-Hispanics, a Nielsen’s Share of Wallet study found Hispanics do differ from the national average somewhat when it comes to actual usage of their financial instruments. Forty-four percent use debit cards most often, while another 34 percent prefer cash or check. Only 19 percent use credit cards most often, compared to 35 percent nationally. The preference for debit and prepaid cards applies whether Hispanics are banked, unbanked, native or foreign-born, millennials or Generation Xers, consumers or business owners.
PayPal & Mobile Wallets
Just how tech savvy are Hispanics? Consider the following: According to the TD Bank Checking Experience Index, Google Wallet, Pop Money, Venmo, PayPal, SquareCash and other services are important among Latinos. Nearly half of Latino respondents surveyed by the index indicated they used PayPal within the last three months to send money to peers, citing ease of use and convenience. These consumers also made 22 percent of all mobile payments in 2014 (16 percent of the U.S. consumer base today).
What’s more, at least 85 percent of Hispanics in the U.S. have mobile phones compared to 88 percent of non-Hispanic whites. However, 82 percent of Hispanic mobile phone users have a smartphone, compared to 68 percent of non-Hispanic whites. Hispanic mobile users with bank accounts show a higher rate of use of mobile-banking relative to mobile phone users with bank accounts overall. They make transactions, pay bills at least weekly and send money internationally with their smartphones.
According to the Federal Reserve, prepaid cards are the fastest growing form of non-cash payments. They are cost-effective, flexible and easy to use for consumers, governments and businesses. A lot of innovation exists from specialized providers more so than traditional financial institutions.
Importantly for multicultural payment strategies, federal regulators are working to ensure language barriers don’t prevent non-English speaking consumers from having a good experience. The more prepaid providers are incentivized to meet the needs of an ever-changing and multicultural market, the better prepaid cards will become as a viable alternative to debit and credit cards.
The variety of payment options available to today’s consumers creates a terrific opportunity for both financial institutions and consumers. Credit unions, in particular, should continue developing a deeper understanding of multicultural member needs and behaviors to effectively reach new consumers. Payments, with their increasing emphasis on mobility and innovation, are a natural place to start.Leave a comment
As the child of Mexican immigrants, I grew up in a household that was unique in many ways from those of my friends and peers. One of the differences was that my parents paid bills, saved money and accessed credit outside the traditional financial system. Hindsight being what it is, I can now see how much of an influence those financial choices had on my eventual career path.
Although it came with challenges, my non-traditional American childhood absolutely empowered me. Today, I feel so fortunate to be living out my passion – introducing more Hispanic consumers to the life-changing benefits of becoming a credit union member.
What’s equally exciting to me is introducing more organizations to benefits of serving Hispanic consumers. As I travel the country, talking with credit unions, colleges and other consumer-centric organizations, I’m learning so much about how perceptions continue to shape reality.
One of the perceptions that Coopera colleagues and I are working hard to reshape is this idea the Hispanic market is homogenous. In fact, there are many nuances to the culture. Let’s take a look at a few…
Acculturation, Language & Immigration Spectrums
Acculturation describes how quickly an individual or set of individuals adopts the behaviors, beliefs/values and attitudes of a new culture in addition to their native culture. The spectrum goes from un-acculturated through semi-acculturated to fully acculturated.
It’s critically important for marketers and others to understand where their target market resides on the spectrum. For instance, a credit union that believes it is best suited to serving semi- or fully acculturated Hispanics will want to know members of these two segments prefer TV and print media outlets, while radio is important for the un-acculturated. In terms of product development, credit cards are common among fully acculturated Hispanics, but that is far from true for un-acculturated individuals.
In addition to behaviors, values and attitudes, there’s also a spectrum of language preferences that vary from Spanish to bilingual to English. Immigration status, too, changes from recent arrival to established resident to U.S. born. All of these characteristics and preferences impact the way Hispanic consumers value (or don’t value) financial services to the quality of their lives.
Financial Attitudes and Behaviors
There is tremendous opportunity for credit unions to foster trust and expand the financial education of some Hispanic community segments. Saving for retirement, seeking financial advice, long-term goals, personal debt and financial confidence are areas that require special concentration across segments of the Hispanic market. Here again, however, there are differences between groups within the culture.
This is why it’s so important to view the results of national studies, surveys and indexes with a grain of salt. Take, for instance, an extensive study of more than 1,000 Hispanic individuals between 25 – 70 with incomes of $25K or higher.
Here are just a few of the findings from that particular national study:
–More than half indicated a poor or very poor understanding of workplace-based retirement plans.
–Half of respondents expressed a preference for Spanish communication and materials.
–Respondents with lower incomes and those born outside of the U.S. place higher priority on funding near-term goals such as education for their children.
When reviewing national studies, be mindful of the word “half.” Let it serve as a reminder of the great diversity that lies within the U.S. Hispanic community. If a particular study finds half of its respondents prefer Spanish, for instance, that could mean the other half did not.
The biggest take away: It’s critically important to understand your local market needs. Like much of the general population, Hispanic consumers strive to improve their financial situation. At the same time, acculturation, language, immigration status and other characteristics such as age, income and country of birth, have a huge influence on how that value is applied day-to-day.
While the Hispanic population continues to grow, it will continue to change. As you approach strategic planning season, consider whether your credit union could benefit from a local market study of the influential Hispanic consumers in the communities you serve.Leave a comment
Achieving a variety of inclusivity and diversity objectives is becoming more important for credit union boards of directors. One such board is that of Community 1st Credit Union in Ottumwa, Iowa. The Juntos Avanzamos-designated credit union recently welcomed Edith Cabrera-Tello to its board.
I’ve been a member of the credit union since 2011 and a board member since January 2016.
What is your view of credit unions as a financial option for the Hispanic community?
What changes have you seen in how Community 1st serves its members and specifically its Hispanic members since you’ve been a board member?
How has the work with Coopera and receiving the Juntos Avanzamos designation impacted outreach to the Hispanic community?
Could you describe your experience as a board member of a credit union from the moment you decided to volunteer until now?
What advice do you have for any potential Hispanic board members thinking about or having been approached to serve on the board of a credit union?
When I was a young girl in the U.S., my parents – both born in Mexico – visited the local U.S. Postal Service (USPS) office to do more than buy stamps and mail packages; they also bought money orders. Without a banking relationship in our community, my parents considered the post office to be a dependable and acceptable way for them to conduct these specific financial transactions.
Today, as an adult and a strong advocate of the credit union movement, I find myself reflecting on my family’s experience. My parents bought money orders at the post office because it was convenient, reasonably priced and they weren’t asked a lot of questions. Simply stated: The post office fulfilled a simple need.
What if the post office had offered other financial services? Services similar to those offered by today’s credit unions? Would they have chosen to use those services?
The changing landscape of financial services, coupled with struggles faced by the USPS, is creating what could be perceived by credit unions as an unsettling reality: Competition from post offices, especially among minority populations, is a real threat.
Consider the following:
Financial institutions have closed about 1,900 branches over the last few years, leaving many low-income neighborhoods without a place to conduct banking. As a result, non-traditional financial entities that levy huge fees, such as payday and cash lenders, have become go-to spots for many who live in these areas.
At the same time, the USPS delivers more mail to more addresses in a larger geographical area than any other post in the world. It handles 40 percent of the world’s mail volume to more than 151 million homes. But in the age of technology, it struggles to keep up. First-class mail volumes continue to drop, and billions of dollars in net loss just this year threaten the livelihood of this “national treasure.” Post offices in rural communities across the country have experienced closures and reduced hours in recent years.
To recalibrate and create relevancy, the USPS is considering various ideas to leverage interest and loyalty from financially underserved communities, which includes Hispanics, the youngest, fastest-growing minority group in the U.S. One of its ideas capitalizes on continuing interest in e-commerce. The other is centered on postal banking. Their goal is to make check-cashing and other basic financial services part of their product/service mix.
The very approach my parents relied on when I was a child is what may challenge the entire community financial institution industry.
The USPS may be able to offer financial services, such as electronic money orders, bill payments, surcharge-free ATMs and affordable microloans, at a lower cost than credit unions. It’s also well-positioned to serve those who are currently underserved for several reasons. Among them:
Once an idea is more thoroughly understood, it’s easier to take a proactive approach. Knowledge can be leveraged; ideas exchanged. Consider the following questions: Can credit unions compete if post offices transition into financial services locations? Can they effectively connect with and earn the trust of underserved communities? Is it feasible for credit unions to develop personalized products?
Without hesitation, I believe the answer is “Yes!” to all of the above. You may be wondering why I’m so optimistic.
Credit unions have long prided themselves on knowing their members and potential members. They already provide consumers an alternative financial route to traditional banks. So, targeting consumers who do not want a relationship with a “mega bank” is already in the wheelhouses of U.S. cooperatives.
Currently, more than 100 million Americans are using credit unions. According to the World Council of Credit Unions’ annual Statistical Report survey, global credit union membership grew by an additional 10 million people in 2014. Growth resulted for various reasons:
All that said, staying ahead of the competition requires getting creative. Three ideas comes to mind:
Without question, it’s preferable to be in a position to choose one’s response vs. being in reactionary mode. Keeping a watchful and curious eye out for what’s transpiring with the USPS will empower credit unions to be at the forefront of growth trends.
It’s said wisdom comes with age. I’ve come to understand that when acclimating to anything new (much like my parents did when they arrived in the U.S.), it’s liberating to have alternatives. Being limited to one way of accomplishing something feels constricting. I’m confident had a credit union been an option for my parents, they would’ve felt welcomed, connected and understood the endless possibilities that occur with strategic financial guidance.
Instinct and experience tells me there are hundreds, if not thousands, of other immigrants interested in achieving their definition of financial success. The benefit of a credit union partner that proactively asks questions so as to guide members along the path of their entire financial journey – from selecting what types of accounts to open to planning for significant milestones such as college or a new home – is priceless. So is the peace of mind that comes with it. I know. I’ve walked in those shoes.Leave a comment
The movement added another Juntos Avanzamos-designated credit union this spring. Welcome, Community 1st Credit Union!
The designation, which translates to “Together, we advance,” is a national recognition of the work and commitment made to offer financial services to the Hispanic community. On May 5, 2016, we were thrilled to join Guadalupe Sanchez Salazar, Consulate General of Mexico, and other local dignitaries in Ottumwa, Iowa, to celebrate the designation with Community 1st Credit Union.
For many Hispanics, navigating the U.S. financial system can be challenging. Credit unions make the process easier. Community 1st is leading the way and hopes to inspire other credit unions around the country to realize the importance of embracing Hispanic community initiatives.
Community 1st is the first credit union in Iowa to receive the designation, which our firm and the National Federation of Community Development Credit Unions (the Federation) recently expanded into a nationwide program. The cooperative worked with our team to set a strategic plan for becoming a fair, dignified and affordable option for the local Hispanic community.
Community 1st is an exemplary financial institution that understands the importance of achieving internal readiness before launching into a Hispanic growth strategy. Notably, 10 percent of Community 1st’s more than 200 employees are bilingual.
“As a credit union, we have a mission to serve underserved populations,” said Anne Hagen, Community 1st vice president of marketing. “We — all credit unions — are not-for-profit institutions. Part of our ‘profits,’ we give back to the community.”
Even though most credit union leaders are aware of the growing Hispanic population in their fields of membership, many are are unsure how to begin serving this young, fast-growing, influential community. Half the battle is developing the right mindset within the credit union. The ultimate achievement is a collective state of mind in which the entire organization believes serving the Hispanic community is not only the right thing to do, but also a profitable, priority business strategy.
Kudos to Community 1st for becoming the first credit union in Iowa to achieve this important milestone.Leave a comment
My alma mater, Iowa State University (ISU), has begun to examine how it can improve diversity and inclusion among its students and staff. Naturally, it’s an initiative about which our entire team is excited and happy to support however we can.
This spring, I had the terrific opportunity to share my student experience at ISU, as well as my thoughts on how the university can become even better at supporting multi-cultural students and staff. What follows is an excerpt of the article I contributed to the university’s alumni publication, Visions.
This particular issue is packed with insights from other passionate ISU supporters and students. Many of their thoughts are applicable to the credit union environment, as well. So, if you have a few minutes and are curious as to the ways in which multi-cultural consumers experience different facets of their life at different stages of their journey, I’d encourage you to give it a read.
My quest toward a college degree was far from a given for me. As the daughter of foreign-born parents who hadn’t attended college in Mexico nor the U.S., I knew it was up to me to own the responsibility. I was fortunate to have friends and advisors at Perry (Iowa) High School to guide me through the entrance exam, application and financial aid processes. Together, we navigated what could otherwise have been a long, confusing road.
I’m sharing this story because I believe it’s an experience shared by many first generation Latino Iowans.
I’m filled with gratitude as I as I think about ISU’s courage in choosing to ask the question: How can we be better [at attracting and serving Latino students]?” Imagine ISU as the premier four-year university attracting, retaining and graduating young, influential multi-cultural students.
Even though more multi-cultural students are attending college than ever before, they tend to choose two-year degree programs because they attend school part-time, live outside campus and have outside responsibilities (such as providing and caring for family members). If this dynamic is altered and multi-cultural students begin to feel part of a larger whole, I believe they, along with their families, will create thriving communities that perpetuate growth and change across the state and nationwide.Leave a comment