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
For many people – especially those of us working in the financial services industry – it can be difficult to understand why someone would not have a bank account (or if they do, why they would still use costly alternative financial services). Yet, legitimate and systemic reasons for a lack of traditional financial relationships offer a glimpse into the “why’s” behind our nation’s underserved communities.
At the recent 2014 CUNA Community Credit Union and Growth Conference, credit union leaders and I dug into the question “Why Are Consumers Unbanked” to uncover strategies that may help the movement better serve these individuals.
Below are just five of the “why’s” we discussed:
Misperceptions about money persist
Geography plays a role
Culture can be a driver
Past behavior predicts future
Language barriers are real
For credit unions, we discussed, there exists a great opportunity to provide a better alternative for these individuals. That’s because everyone has financial service needs – almost daily. Take a look at the five “why’s” above and ask yourself if your cooperative can address any or all of these for your local unbanked and underbanked community.Leave a comment
The Hispanic market in the U.S. continues to grow and change at a rapid pace, which will present significant opportunities (and challenges) in 2014. One of the most important ways to prepare right now to better serve Hispanic members in the coming year is to conduct an audit of your bilingual marketing materials and signage.
One of the most common misconceptions about the Hispanic culture is that Hispanics speak different forms of Spanish. Although there are different colloquialisms or words, phrases or statements that are unique to a certain culture or region, there are not completely different forms of the language — the basic language structure of Spanish is shared. Because there are cultural nuances in the Spanish language, it is important for your credit union to make sure that your translations are accurately conveying your messages. The best way to accomplish this is by performing what are called “back translations.”
What is a back translation? It is a second translation of text back to the original language (in most cases, English) to ensure developers understand the final meaning of their translation.
When the source language is English, there is often discrepancy in the meaning between the original source and the back translation. Spanish, for example, has a notably different vocabulary, and many words that are used in English simply don’t exist. Back translations should be performed to ensure that the language is a correct translation of the original, in which, the meaning was not changed, but also the readability of the text has not been affected through the translation process. The process should include conducting at least two back translations and working with the original translation to accommodate the findings of the back translation.
Here’s an example: When you translate the English phrase “all the rage” to Spanish, you do not want to convey the literal meaning but rather the cultural meaning of that phrase. The Spanish translation of this phrase could be “lo ultimo.” A back translation of “lo ultimo” would tell you that you are translating “all the rage” to a similar phrase that will be understood in Spanish that means “the latest.”
The important thing to remember when doing back translations is that the person doing the back translation should be familiar with the original version in English to avoid inadvertently changing meanings of the content. For credit unions, here are some examples of common phrases you’d likely have translated and the corresponding back translations:
English source: Limit our sharing
English source: Build Credit
To prove how easy it can be to incorrectly back translate certain phrases, here are some examples of back translations gone wrong:
English source: Batch (transactions)
English source: Arrangement between two parties
Although they may seem to be a time-consuming and expensive task, back translations are a critically important part of your credit union’s validation and cultural adaptation to specific Hispanic markets. Doing back translations can help to avoid errors, as well as better understand what the credit union has had trans-created. For instance, many credit union compliance or legal departments request back translations to double check that approved messages are what is truly being distributed to members.
By becoming more familiar with the language nuances of your credit union’s local Hispanic population, you will be better positioned to provide for these members’ needs. For credit unions willing to invest the time and resources, the benefits of a bilingual marketing audit will greatly outweigh the perceived costs.
To best understand the make-up of the local population Coopera can help with a comprehensive market analysis. Rest assured, however, the basics of the Spanish language will be understood by your Hispanic members.
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Sending money home is very important to the Hispanic community. For credit unions looking to grow their membership base and revenue opportunities, offering remittance services (from branch locations, via phone or even online) is a great value-added tool to help build a strong relationship with the Hispanic community. The World Bank reported that remittance flows topped $530 billion in 2012. More than $63 billion of that total was remitted from the U.S. to Latin America and the Caribbean (a large percentage of that $63 billion was sent to Mexico and Central America).
Traditionally, remittance service providers (i.e. non-wire transfer services) have been outside of the financial service industry…think mom-and-pop grocery stores.
Currently, credit unions have a negligible market share in the remittance space.
But, the remittance landscape is changing. With new consumer-focused regulations (the CFPB’s remittance transfer rule regulation will take effect on October 28, 2013), all remittance providers will be impacted. Under the rule, “Remittance transfer providers are required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors.”
Many current providers are finding it hard to comply with the CFPB’s new rule and have chosen to get out of the service. But, this hasn’t changed the strong need for remittances, especially for Hispanics. It’s simply created a lot of uncertainly in the industry as to who will provide this service moving forward, and what that service providers will need to do to be able to offer remittances.
Credit unions are well-positioned to pick up where these other remittance service providers have left off. Beyond simply allowing Hispanic consumers another choice for sending money home to loved ones, providing remittance services also gives credit unions the chance to deliver more comprehensive financial services to this market segment.
This is why it’s so important for credit unions to understand the makeup of their local Hispanic community. For example, if a credit union has a large percentage of 2nd or 3rd generation Hispanics who are more acclimated into the U.S. financial system, adding remittance services to the business’s product portfolio may not be the right fit. But if the credit union has a large population of underserved Hispanics in the area, offering remittance services could make a lot dollars and sense.
With more than one in four households (nearly 30 percent) in the U.S. today is underserved (i.e. conducting all or some of their financial transactions outside of the mainstream banking system) — and Hispanics representing a disproportionate number of this group — the pursuit of this market for potential members may initially seem counterintuitive for a credit union. But, the underserved represent a large market opportunity. That’s because underserved Americans are a fast-growing and young population with growing incomes.
For the credit union, whose collective mission is “people helping people,” that supports such an underserved individual through a difficult time, the potential for life-long loyalty is huge. And underserved Hispanics, in particular, tend to have large households and live in tight-knit communities, creating more word-of-mouth opportunities for the credit union that serves them well. The outcome of adding tools like remittance services is a win-win for credit unions willing to embrace the opportunity.Leave a comment
This blog contains excerpts from the recently published article “Path to Citizenship Will Lead Members to Your Door” in Credit Union Magazine.
With an estimated 11 million undocumented immigrants currently living and working in the U.S., immigration reform will have a tremendous impact on the economy — particularly the financial services industry. Like many American businesses and organizations, credit unions stand to benefit from an immigration reform bill, particularly as it relates to helping immigrants as they travel the path to citizenship. Credit union leaders who think strategically about membership growth can’t afford to ignore the important step many Americans are pushing their legislators to take.
In the most basic sense, credit unions will find a completely new market for lending products in the wake of immigration reform.
Here’s how: Today, the filing fee for the application to naturalization through the U.S. Citizenship and Immigration Service has reached $680 per person, and families often have several individuals going through the process at once. Unfortunately, this can be the least of the all the necessary expenses, which may include filing fees for temporary residence, permanent residency or legal fees. In fact, some families pay upwards of $10,000 when all is said and done for just one individual to adjust his or her immigration status.
Whereas U.S.-born consumers may not think twice about using traditional financial institutions to save and borrow to pay for fees associated in gaining citizenship, a Hispanic immigrant may not think this is even an option. With check-cashers, money order providers, and friends or family fronting loans, credit unions often are not even considered by Hispanic immigrants.
Credit unions can change this — now is the perfect time for Hispanics to be introduced to the credit union difference.
A critical first step is establishing trust. Credit unions must work within their local communities to begin to build the relationships that will grow over time. Credit unions already working with Hispanic communities certainly have a leg up — grassroots community initiatives often yield a higher return than extensive media campaigns.
One of the best grassroots efforts to start with is culturally relevant financial education sessions that take into account how Hispanic immigrants handle their money today and shows them better alternatives that help them achieve financial success. These are particularly beneficial for credit unions looking to serve immigrant families who are not only going through the immigration and naturalization process, but who are simply going through the stages of life that require a sound financial partner.
It’s this kind of outreach that ultimately allows credit unions to plant the seeds of trust that grow into loyal, life-long memberships.Leave a comment
Thanks in part to the Hispanic market’s disproportionate number of underserved consumers, competitors from all corners of the financial services industry have targeted Hispanics with renewed vigor in recent years. These include money service businesses such as check cashers, money transfer providers and money order issuers. Small-dollar loan providers, rent-to-own shops and high-interest auto financing providers are also finding a customer goldmine within local Hispanic communities.
Much of this is due to the Hispanic culture’s reliance on advice from friends and family. When one organization serves a Hispanic customer well, chances are that business will grow quickly from referrals. As well, entirely new providers have come on the scene, making competition for the critical Hispanic market even tougher.
While tax providers offering refund anticipation loans are nothing new, they are now offering loans in the form of prepaid cards, giving underserved Hispanic consumers access to the safety and convenience of plastic. The popularity of prepaid cards with underserved consumers has sparked tremendous growth in the prepaid sector with Walmart leading the pack and Hispanic focused companies like Telemundo and Univision also getting in on the game.
Because 91 percent of those identified as underbanked have mobile phones and 57 percent have smartphones, mobile services for this group are also springing up rapidly. One example is m-Via’s Boom service, a P2P mobile payments service targeted to the underbanked.
Fortunately, credit unions have several innate qualities that help them compete against long-time and new-comer financial services providers. The ability to offer the same products and
Where you start depends, of course, on the special opportunities unique to the immigrants in your local communities. By performing a comprehensive market analysis, credit unions can better define their target market, understand the competitive factors that will shape their own strategies and begin to see how service to immigrant populations can align with their overall growth strategies.
This blog is an excerpt from the guest opinion article “Immigration Reform May Prompt Member Push” recently published by the Credit Union Times.Leave a comment
Last month, the U.S. Senate introduced an immigration reform bill that proposed a complete overhaul to the country’s immigration system. Although a vote is likely several months away, credit union leaders would do well to begin paying attention now as passage of immigration reform will undoubtedly impact them.
If instituted, the proposed path to citizenship included in the bill will bring about an increased need for assistance to an estimated 11 million undocumented immigrants in the country today. With identification and documentation barriers removed, these aspiring U.S. citizens will begin the search for trusted providers of everything from English as a second language courses to home sales.
Of the estimated 11 million undocumented immigrants in the country today, many are Hispanic. According to the Pew Hispanic Center, nearly 60% are of Mexican origin, making outreach to this particular group very important for credit unions bracing for the impact of immigration reform. Beyond its sheer size, the Hispanic market’s youth has made service to this group a sound investment for credit unions looking to grow while lowering the average age of membership.
Credit unions that have been serving immigrants well and building trust in the communities they serve, will have a definite leg up when these new business opportunities come to fruition. That said, it’s not too late to begin following in these progressive credit unions’ footsteps. And for some credit unions, particularly those in gateway states, it’s not only a good idea. It’s critical for leadership to begin formulating an outreach strategy today — one that will put them in touch with these potential new members now.
The introduction of immigration reform bills by our legislators shines a bright light on what some credit unions have already learned: Investing in service to the critical Hispanic market is vital to future growth.
This blog is an excerpt from the guest opinion article “Immigration Reform May Prompt Member Push” recently published by the Credit Union Times.Leave a comment
Sometimes referred to as the “Mexican St. Patrick’s Day,” Cinco de Mayo (held each year on May 5th) is one of the most misunderstood holidays we celebrate in the U.S., even by people of Mexican heritage.
Despite its reputation, Cinco de Mayo does not mark Mexico’s Independence Day. That is celebrated on September 16, the day in 1810 when Father Miguel Hidalgo took to his pulpit in Dolores, Querétaro, and urged his congregation to join him in efforts to overthrow the Spanish tyranny in Mexico. The celebration is also known in Mexico as El Grito de Dolores or “Cry of Dolores.”
Cinco de Mayo is actually a regional holiday in Mexico, called El Día de la Batalla de Puebla, celebrating Mexico’s victory over the French on May 5, 1862, during the Battle of Puebla in the American Civil War. Although Cinco de Mayo is a big holiday in Puebla, it is actually celebrated more in the U.S. than it is in most of Mexico. In the U.S., Cinco de Mayo is celebrated with parades and festivals that offer plenty of traditional Mexican food, cold beverages and music for participants. The holiday has really become more about celebrating the Mexican way of life than about remembering a battle that happened 150 years ago in Mexico.
Just as there is a misconception about Cinco de Mayo, there are also common misconceptions about Hispanics and the Hispanic culture of which credit unions looking to better serve this market should be aware. These include:
– All Hispanics are Mexican. “Hispanic” is a U.S. Census term often used to refer to people of Latin American and Spanish origin regardless of race. U.S. Hispanics have roots in 21
– All Hispanics are Catholic. About 62 percent of Hispanics are Catholic, but there is a growing conversion rate from Catholicism to other religions. In fact, the Mormon church recently reported the number of Spanish-speaking Church of Jesus Christ of Latter-day Saints congregations in the U.S. rose from 389 in 2000 to more than 760 at present. According to a Pew Hispanic survey, 83 percent of Hispanics claim a religious affiliation, and one in five (19 percent) say they are Protestant. Fourteen percent of Hispanics say that although they are religious, they are unaffiliated with a particular religion.
–Hispanics speak several different forms of Spanish. While not all Hispanics speak Spanish, Spanish is the overarching language for many Latin American countries. According to Pew Research, more than 80 percent of Hispanic adults say they speak Spanish. Even though there are cultural nuances in the Spanish language, there are not completely different forms of the language in Latin American countries — the basic language structure of Spanish is shared.
That said, there may be different colloquialisms or words, phrases or statements, unique to a certain culture or region. To best serve your local Hispanic community, it is important to learn the make-up of the local population. Coopera can help with a comprehensive market analysis.
Rest assured, however, the basics of the Spanish language will be understood by your Hispanic members regardless of the Latin American country from which they hail.
–All Hispanics are poor immigrants. Not all Hispanics are immigrants (foreign nationals born outside of the U.S.), and the U.S. Census Bureau reported that there were over 2.1 million Hispanics in the U.S. with personal income over $65,000 in 2011. Today, the U.S. Hispanic population is made up of multiple generations of people from different countries of origin, from different income levels and different life experiences. Each Hispanic in the U.S. today can claim his/her own characteristics, beliefs and behaviors.
The Hispanic market in the U.S. is rapidly growing and changing, which presents important opportunities for credit unions that invest the time and resources in preparation for further expansion. One way to learn more, and to prepare your staff, is by investing in a resource like CUNA’s training-on-demand resource Hispanic Immigration Course. By becoming more familiar with the nuances of the Hispanic population, credit unions will be better positioned to provide for these members’ needs.Leave a comment
Commissioned by the California and Nevada Credit Union Leagues, a new report from Coopera highlights opportunities for credit unions in California and Nevada to grow their membership and increase their revenue through service to local Hispanic populations.
Coopera’s Hispanic Opportunity Report will be available to California and Nevada Credit Union League Applied Research Institute members first, and then it will be available to the general public following these webinars:
As the influence and impact of Hispanic consumers continues to grow in the U.S., the Coopera Hispanic Opportunity Report discusses what serving Hispanics means for California and Nevada; which credit unions are best positioned to serve the Hispanic community; and characteristics of the local communities that must be considered to successfully serve Hispanic residents.
According to the report, local credit unions’ biggest growth opportunity right now is Hispanics.
In California, the report uncovers:
For the report, the Coopera team calculated if 10 percent of California’s Hispanic adults were members of a credit union, they would contribute an estimated $2.1 billion in loan balances and $592 million to annual income.
In Nevada, the report reveals:
A similar calculation done for Nevada, based on an assumption of 10 percent of the Hispanic community joining a credit union, found Nevada’s Hispanic adults would contribute an estimated $82 million in loan balances and $28 million to annual income.
The Hispanic Opportunity Report also debunks common myths businesses have about the Hispanic community and shares case studies of credit unions with successful Hispanic outreach efforts, including:
For more information about this report, contact Coopera at: http://www.cooperaconsulting.com/contact-us.cfmLeave a comment
Building on their five-year partnership, the Credit Union Association of New York (CUANY) and Coopera have signed four credit unions to take part in the inaugural Hispanic Member Growth Strategy Program. Spots for four additional mid-sized credit unions to participate in the outreach program are still available.
Demographics show the importance of helping New York credit unions grow by serving the Hispanic market. In New York:
– Hispanics are the largest, fastest-growing, youngest and most underserved group in the U.S.
As part of the Hispanic Member Growth Program, Coopera provides valuable resources and counseling to three small (assets under $25M) and five mid-sized ($25M-$500M in assets) New York credit unions, helping them identify Hispanic outreach opportunities within their neighborhoods and create affordable banking alternatives to meet the needs of this community.
To date, four credit unions are participating in the CUANY and Coopera program:
– Cooperative Federal Credit Union of Syracuse
More information on the 2012 Hispanic Member Growth Strategy program is available via archived webinar at http://diigo.com/0pzxe.
New York credit unions interested in participating in this program should contact Coopera at 866.518.0214 or www.cooperaconsulting.com for additional details.Leave a comment