What Credit Unions Need to Know about Debt Aversion in the Hispanic CulturePosted by Miriam De Dios Woodward 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.
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. Leave a commentCredit Unions Set Sights on Payment Competitors to Attract Underserved HispanicsPosted by AnnaPeña 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 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. Leave a commentYour Future Prepaid Cardholders are HispanicPosted by Miriam De Dios Woodward on November 20, 2012
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. Leave a commentPrepaid Cards Perfect for Consumers Fed Up with Soaring FeesPosted by Miriam De Dios Woodward on November 13, 2012
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. Leave a commentDo Homework Before Choosing a Prepaid Card ProductPosted by Miriam De Dios Woodward on November 6, 2012
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. Leave a commentCoopera Card Ranks 5th on NerdWallet.comPosted by AnnaPeña on October 16, 2012
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: 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 Leave a commentSet Your Prepaid Products Apart from the RestPosted by Miriam De Dios Woodward 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. Leave a comment |
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