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  • What Credit Unions Need to Know about Debt Aversion in the Hispanic Culture

    Posted by on September 28, 2017

    Over the next few months, we will write on a series of financial inclusion topics as they relate to the Hispanic culture. This first one focuses on an aversion to debt that exists within many segments of the Hispanic population. It also offers ideas for credit unions on how to provide education and value in this area.

    Why do Hispanic consumers tend to avoid debt?

    Although there’s no one right answer to this question, it’s important to remember conventional banking as we know it in the U.S. may not be part of the traditional Hispanic upbringing. As Glenn Llopis, founder of the Center for Hispanic Leadership, wrote in a HuffPost blog post, “This has led to a general mistrust of banks and, when coupled with a natural skepticism, would account for the $53 billion attributed to ‘unbanked’ Latino households (according to a research arm of the University of Virginia’s Darden School of Business).”

    We see the effects of debt aversion in higher education, as well. According to Hilda Hernandez-Gravelle, senior research fellow for the Institute for College Access & Success, several cultural factors contribute to the difficulty Hispanic students often experience when it comes to securing financial aid for college. These include fear of debt, mistrust of lenders and conflict between family obligations and educational aspirations. “While Latinos generally have a strong commitment to education, many believe that if you can’t afford to pay for it up front, you can’t attend,” Hernandez-Gravelle writes.

    How can credit unions help?

    Avoid a one-size-fits-all approach to financial education.

    It’s important to remember different cultures and financial classes have different perspectives on money and financial services providers. For example, as psychologist Miquela Rivera, PH.D., points out, for first-generation, low-income Hispanics, accumulation of money might be, at first, the main goal. Later, they may realize money in itself is not a satisfier, but that satisfaction comes from doing what they want in life, without excessive financial worry.

    “Latino students who are financially literate must view money as a means, tool or resource for getting things done, not an end in itself,” Rivera writes. When credit unions help their Hispanic members achieve this mindset, those members begin to see more clearly the importance of establishing credit and that debt, when managed responsibly, can actually be beneficial.

    Focus on cultural needs vs. language barriers.

    Rather than focusing on literacy and word-for-word translations, Principal’s Hispanic Market Program focuses on context and cultural needs to engage Hispanics in retirement savings. The program promotes a “transcreate vs. translate” ideology, focusing on context in written educational materials rather than the word-for-word translation. Also built in is incorporating simplicity in presentations and correcting misinformation, such as the kind that leads to distrust in financial institutions.

    Credit unions should take a similar approach to educating Hispanic members and prospective members about debt and creditworthiness.

    Build trust and credibility.

    Llopis recommends offering culturally relevant and language-appropriate products and services backed by bilingual staff. He adds it’s also important to show genuine concern for the community – for example, by active involvement in Hispanic issues and sponsorship of local events. The community will be more likely to trust the education a credit union offers if it’s playing an active role in the betterment of their daily lives.

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    Credit Unions Set Sights on Payment Competitors to Attract Underserved Hispanics

    Posted by on November 17, 2014

    We get asked often why a firm focused on Hispanic outreach is based in Iowa, a state many consider less-than-diverse. In fact, the Hispanic population in our home state more than doubled from 2000 to
    2013 and is expected to account for more than 12 percent of Iowa’s population by 2040.

    The change to our state’s consumer make-up has not escaped the attention of Iowa’s credit unions. Leaders of the state’s movement are right now exploring ways to invest in service to Hispanics, the largest, fastest-growing, youngest and most underserved group in the U.S.

    To help, Coopera and the Iowa Credit Union Foundation (ICUF) recently facilitated a roundtable for Iowa credit unions. In the 4-hour session, we joined four credit unions already doing an excellent job with service to underserved consumers, many of whom are Hispanic.

    To my right are Jocelyn Peña, Greater Iowa CU; Nicole Suarez, Village CU; Traci Stiles, Des Moines Metro CU; Jessica Martens, Community 1st CU

    Among the different ways we talked about adapting credit union products and services to this special market, the concept of unique payment products stood out. Because underserved consumers continue to use high-cost alternatives to pay bills, make rent payments and secure short-term loans, payment products present a sizable opportunity for credit unions looking to reach this market.

    Here are just a few of the alternative payment providers already popular with the underbanked, Hispanics included:

    PayNearMe: This provider issues plastic cards and PaySlips that can be printed or displayed on a mobile device.

    Walmart: The retail giant continues to diversify its financial service products, which include everything from credit cards to money transfers. Most recently, it began marketing a low-cost checking account.

    LendUp: Credit-building loans starting as low as $250 available with instant approval online. (Of course, it comes with a hefty price tag at 29% APR).

    WipIt: Allows Boost and Sprint mobile phone users to make payments with cash directly from their phone.

    OnDeck: Provides small business loans online, and underwriting is based on performance rather than individual credit.

    Boom: A prepaid card with mobile banking features.

    For each of the above, our expert panelists brainstormed alongside Iowa credit union leaders how cooperatives could compete and why they should. It was an excellent discussion, and one I’d be happy to share in more detail one-on-one. Send me an email with your thoughts or questions and we can talk through your credit union’s payments strategy and how it may be configured to appeal to the underserved Hispanics in your community.

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    Case Study: Targeted Programs Focus on Members’ Lifestyle Needs, Not Cultural Differences

    Posted by on May 7, 2013

    What follows is a case study excerpt from the Hispanic Opportunity Report developed as part of the California and Nevada Credit Union Leagues’ newly formed partnership with Coopera.

    In 2004, Great Basin Federal Credit Union of Reno, Nev., recognized how fast the Hispanic population was growing in Washoe County. Indeed, it was projected to reach over 30 percent of the county’s population in the coming decades. The credit union’s leadership knew it was the right time to showcase its differences from other financial institutions (FIs) in the area. Offering better programs and services to meet the financial needs of Hispanic consumers was one way they set out to do just that.

    “Great Basin strives to enrich the lives of its members, regardless of heritage or nationality, through education and financial excellence,” said Elisabeth Hadler, Great Basin FCU marketing manager. “As a financial cooperative that focuses on service, not profits, we work to build personal relationships with our members to best understand what they need from their financial institution.”

    Driven by its people-first philosophy, Great Basin FCU set out to implement Hispanic outreach efforts focusing on lifestyle needs rather than cultural differences.

    Before they could focus on outreach, Hadler said, Great Basin FCU worked to implement an internal infrastructure to accommodate their upcoming efforts. They hired more bilingual staff and gave pay raises to those staffers who learned Spanish. At one point, up to 50 percent of the staff boasted bilingual capabilities. Great Basin FCU also partnered with specialists to offer a series of diversity and language training programs for employees’ ongoing education.

    The cooperative also programmed its phone system to offer its menu and directory assistance in both English and Spanish, as well as set up a special voicemail inbox for Spanish-speaking members who were invited to leave messages with their specific questions or needs. Great Basin FCU also put processes in place to ensure Hispanic members who visited any of their branch locations were able to conduct all meetings and transactions with a Spanish-speaking employee.

    “Our membership responded really well to the processes we implemented to bolster our Hispanic outreach efforts,” said Hadler. “Through these steps, we were able to build loyalty with our current membership and gain an awareness and trust with prospective members.”

    Once the internal infrastructure was in place, Great Basin FCU turned its attention outward, said Hadler. To build relationships in the communities they serve, the cooperative also joined the local Hispanic chambers of commerce and encouraged employees to attend local Hispanic community events.

    The cooperative also initiated member workshops in Spanish to connect financial literacy with Hispanics’ particular banking needs, as well as to educate members about their home buying and credit-building programs. These workshops were designed to help members better understand the importance of building credit, how to maintain good credit and how to decipher a credit report, among other credit-related topics.

    Great Basin FCU also had implemented an indirect lending program for consumers to receive pre-approval and financing options on-site at local car dealerships. The program removed an extra step in the car-buying process, eliminating the need for the car-buying member to visit a Great Basin FCU branch location to complete the vehicle purchase.

    One popular program for Great Basin FCU members has been the Directo a Mexico program, noted Hadler. Directo a Mexico is a wire-service program designed to offer members a more affordable way to send money outside the U.S. Transfer processing fees are waived for core credit union members who transfer money from Great Basin FCU to another FI outside the United States that participates in the program. For customers who are not core members, transfer process fees can be as low as $10, compared to more costly fees of $35 for transferring money to FIs not part of the Directo a Mexico program.

    When the 2008 recession hit, it was a struggle for Great Basin FCU to maintain its outreach efforts, according to Hadler. “The economic downturn really limited the time and resources we were able to devote to our Hispanic outreach efforts,” said Hadler. “Because of the costs involved, we scaled back on our bilingual marketing materials, and we found it harder to retain bilingual staff. And with changes in compliance, we found it even more challenging to track and measure the success of our programs.”

    That said, Hadler noted the cooperative worked hard to keep programs like Directo a Mexico in place. As well, the credit union has continued its internal processes to offer members in person and over-the-phone service in both English and Spanish.

    “Over the years, Great Basin FCU has grown its Hispanic base to be more than 25 percent of the 150,000 members we serve,” concluded Hadler. “We’re proud that even in the face of economic uncertainties, we made the right decision, continuing to offer the financial programs and services the Hispanic market needs most.”

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    Your Future Prepaid Cardholders are Hispanic

    Posted by on November 20, 2012

    For the first time in our country’s history, minority births reached 50.4 percent of total births in the U.S. from July 2010 to July 2011, according to the Census Bureau. Of the total births in that year, the Census reveals that nearly 26 percent were Hispanic.

    Looking at numbers, it’s easy to see the question isn’t will Hispanic members be a part of your future, but how soon. By providing dignified financial services to Hispanics, your credit union will not only achieve successful growth for your cooperative; you’ll also make a difference in the lives of your neighbors.

    Competition for this growing segment is heating up. This is why it is incredibly important for your credit union to offer prepaid products that focus their marketing power on differentiation, and understanding how Hispanic cardholders will use your prepaid card products is key.

    Hispanic cardholders may want to use their prepaid card as an affordable way to share funds with family members abroad so it’s important that your prepaid card offering does not limit the amount of cardholders on the account to two persons. Prepaid cards like the Coopera Card, which not only offer cardholders cash loads via in-branch, online, direct deposit and Visa ReadyLink merchants, also allow cardholders to request up to six additional cards for family, whether stateside or outside the country.

    For cardholders looking to use prepaid cards as an alternative to money transfers, presenting an option that charges less in foreign exchange rates, like the Coopera Card that currently offers a foreign exchange rate of one percent compared to the two percent other cards charge, can go a long way toward attracting cardholders to your credit union.

    Also, do not underestimate the strong need for language and cultural relevance with your prepaid card offering. Consult with a specialist who can double check the cardholder’s entire user experience, as well as your credit union’s marketing approach and message to be sure they are relevant. Prepaid cards configured to support the cultural and lifestyle nuances of your target membership, can be incredibly influential in developing long-term members for your credit union.

    Now is the perfect time to begin outreach to the Hispanic community, and prepaid cards can be just the door-opener you need to begin courting this market.

    The content of this blog is based on the Coopera white paper “Prepaid Cards Are Not Created Equal.” Download the paper for free today.

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    Prepaid Cards Perfect for Consumers Fed Up with Soaring Fees

    Posted by on November 13, 2012

    With demand-deposit accounts and debit card transactions so strictly regulated, many of your credit union’s big-bank competitors have imposed a variety of new fees on traditional banking services. This has led to many consumers, both banked customers as well as the underserved, choosing to carry cash or use prepaid cards instead of paying these rising fees.

    Because prepaid cards can be used much like debit cards, to pay bills or make purchases, as well as to withdraw and transfer funds and account information with ATM and text-messaging services, they have become a strong alternative to costly check-cashing services and money transfer services.

    With a focus on fair fees – and more importantly, disclosure of those fair fees – many prepaid card vendors, including Coopera, have voluntarily adopted a fee-disclosure box that makes it easier for consumers to compare prepaid card fees and choose the one that best fits their needs.

    For credit unions, the potential exists to provide a prepaid card that goes beyond simply access to funds via plastic. It is an opportunity for your credit union to build a long-term relationship with the underserved, as well as to convert disenfranchised big-bank customers into loyal members.

    The content of this blog is based on the Coopera white paper “Prepaid Cards Are Not Created Equal.” Download the paper for free today.

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    Do Homework Before Choosing a Prepaid Card Product

    Posted by on November 6, 2012

    Today, the underserved — many of whom choose not to join a credit union or open an account with a bank simply because they do not trust U.S. financial institutions — are frequently using expensive nonbank financial services, like money orders, check-cashing and payday advances instead. Prepaid cards, too, are a growing alternative for this group, who are looking for fast, easy and cheap ways to pay bills and to make purchases.

    To protect underserved consumers, scrutiny of prepaid card products is on the rise. In fact, financial regulatory organizations, like the Consumer Financial Protection Bureau (CFPB), are under enormous pressure to crack down on all manner of so-called predatory services targeting the underserved.

    If your credit union plans to offer a prepaid card product as part of your strategic growth, this is something you need to keep an eye on. Monitoring the situation is not just to protect your business, but it is also so you understand the competitive advantage you can leverage with the right prepaid card product.

    Before you partner with a prepaid card vendor, do your homework — know the differences in the available options (fee structures, terms and conditions, as well as disclosures). To make sure you are bringing the safest, most reliable and best-suited product forward, find the prepaid card that is tailored to match the financial behaviors of your members.

    The content of this blog is based on the Coopera white paper “Prepaid Cards Are Not Created Equal.” Download the paper for free today.

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    Coopera Card Ranks 5th on NerdWallet.com

    Posted by on October 16, 2012

    The Coopera Prepaid Reloadable Visa® Card has been ranked by NerdWallet.com as one of the most affordable, cost-effective prepaid cards available to consumers. The online financial planning resource’s ranking is based on the Coopera Card’s low fees as compared to more than 70 other prepaid card options on the market, including two competing prepaid card products also specifically targeted to Hispanic cardholders.

    The Coopera Card is also the only prepaid reloadable card in NerdWallet.com’s top five ranking that was specifically designed for the Hispanic cardholder and provides a seamless cardholder experience in the language of choice of the Hispanic cardholder.

    Because no two prepaid card products are exactly the same, especially when it comes to fees, like monthly, ATM or transaction fees, NerdWallet.com built an interactive prepaid card comparison tool to help consumers standardize prepaid cards’ disclosures, fee structures and terms and conditions. The tool gives consumers a tailored, at-a-glance understanding of each card’s cost structure and ranks a prepaid card’s affordability based on:
    • Card use, including both signature and PIN transactions;
    • ATM use, including withdrawals and balance inquiries;
    • Reloads, including cash reloads; and
    • Direct deposit and monthly loads, to determine if the user is eligible for a discount.

    One of the ways the Coopera Card keeps costs low, and its ranking on NerdWallet.com high, is by offering fee-free cash loads at the cardholder’s credit union, by direct deposit of payroll checks or through online transfers from an existing checking or savings account, as well as from other credit or prepaid cards. And for the cardholder’s convenience, Coopera Card cardholders can also load cash on their cards via Visa ReadyLink merchants for a fee.

    To see how the Coopera Card compares to other prepaid cards, visit: http://www.nerdwallet.com/prepaid

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    Set Your Prepaid Products Apart from the Rest

    Posted by on October 2, 2012

    Prepaid card options are popping up all over the place. But with very little regulatory oversight, these cards’ disclosures, fee structures and terms and conditions are all different. This can make choosing the right card option difficult for your Hispanic members.

    To differentiate your prepaid card from stand-alone options that are issued directly to Hispanics consumers, you need to do more than simply sell it. Hispanics, particularly non-English speaking or immigrant members, can find the U.S.’s financial services intimidating, confusing or culturally irrelevant. This is not an insurmountable hurdle for your credit union; it’s an opportunity. Take advantage of where your competitors may be falling short — offer an education component to your card’s services.

    A major fear among many underserved, Hispanic and non-Hispanic alike, is that prepaid-card fees will rob them of their hard-earned money. Another fear is that a prepaid card may open them up to the risk of debt. Prepaid cards are designed to do the exact opposite, and it’s vital that your staff be prepared to confront these misconceptions by educating cardholders on the features and benefits of your prepaid card option. Not only do you want to make sure cardholders understand the terms and conditions of the card, but you also want to teach them how to connect the product to their daily financial habits.

    Remember, your goal is to lead your Hispanic members down a path to financial responsibility, and ultimately, convert them into long-term, viable and contributing members of your credit union.

    The content of this blog is based on the Coopera white paper “Prepaid Cards Are Not Created Equal.” Download the paper for free today.

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