Recent research by CUNA Mutual Group’s TruStage reveals interesting insights about the unique makeup and preferences of Hispanics and other multicultural consumer groups. Below are some of the key findings from the What Matters Now research along with what they mean for credit unions seeking to establish more meaningful relationships with multicultural consumers.
Multicultural consumers have significant buying power.
Over the past five years, multicultural consumer groups have accounted for 100 percent of U.S. population growth and 61 percent of credit union growth. The annual spending growth rate for Hispanics is 4.1 percent, compared to 1.4 percent for Whites.
What it means for credit unions: Credit unions desiring to grow their memberships, assets and loan balances should place a strategic focus on their outreach efforts to Hispanics and other multicultural consumer groups.
Hispanic appreciation for apps over-indexes other groups.
Hispanic consumers are almost two times more likely than Whites to research financial products and services using mobile apps. Additionally, 17 percent of Hispanics reported applying for financial accounts and products through an app, compared to only 9 percent of Whites.
What it means for credit unions: To be relevant to Hispanic and other multicultural consumers, credit unions should be investing in mobile strategies. These cooperatives should ensure their mobile apps have a Spanish language option and the experiences are culturally relevant to Hispanic consumers.
Business loans are a desired product.
Hispanics are nine times more likely than Whites to take out a small business loan in the next five years.
What it means for credit unions: Invest in products and resources to help Hispanic entrepreneurs, such as small business-friendly loans, microloans and small-business financial education. Also, consider partnering with organizations that offer small business assistance, such as local Hispanic chambers of commerce and small business incubators.
Hispanics prioritize ease of use.
Twenty-three percent of Hispanics look for convenience in financial products and services, even if it means higher rates or fees, compared to only 9 percent of Whites. Flexible payment schedules and speed of lending are also more important to Hispanics than other groups.
What it means for credit unions: No two consumers are exactly alike. Providing a range of product options and fee structures will help you be relevant to a wider range of consumer segments. Offering instant online loan approvals is one way to meet a need for many Hispanic consumers.
Hispanic consumers tend to worry about finances.
Every expense category studied by CUNA Mutual causes Hispanic consumers concern — sometimes up to 20 percent more than other consumer groups. At the same time, Hispanics tend to have a stronger sense of generosity and community than other consumer groups.
What it means for credit unions: Think about ways to help relieve concerns for Hispanic consumers through relevant financial education and resources. Also, be sure to educate local consumers on the credit union philosophy of “people helping people,” and share stories of how your credit union and members are improving the lives of individuals and families in your community.
As you apply these findings to your credit union’s Hispanic outreach strategies, be careful not to over-simplify the data. “When examining the research findings, it’s important to remember a person is made up of many unique cultural aspects,” said Opal Tomashevska, manager, multicultural business strategy, CUNA Mutual Group. “Be careful not to over-generalize or create stereotypes from this information and apply it to all members of a certain group. The data shows trends and significant differences but does not attempt to speak for every individual.”Leave a comment
The annual Financially Underserved Market Size Study, conducted by the Center for Financial Services Innovation (CFSI), illustrates the tremendous opportunity that exists to address the needs of financially underserved consumers. The study measures the size, composition and opportunity for products and services underserved individuals use to save, spend, borrow and plan.
Here are some of the 2017 study’s highlights:
• Underserved consumers spent $173 billion in fees and interest to use $1.94 trillion in financial services in 2016.
• Spending by financially underserved consumers increased 6.6 percent, or $10.7 billion, in 2016.
• The market has grown an average of four percent each year since 2009.
The report also identifies five trends driving opportunities for financial services providers. What follows are a few ways credit unions may consider leveraging these trends to improve the financial lives of underserved consumers in their communities.
How Credit Unions Can Help
How Credit Unions Can Help
How Credit Unions Can Help
Small Business Finance
How Credit Unions Can Help
How Credit Unions Can Help
Clearly, there are many ways a credit union may be able to leverage the trends driving opportunities in underserved markets. Before embarking on a new initiative, however, a credit union should ensure the strategy aligns with its mission and target market. Doing it right requires a decent amount of work, and importantly, buy-in from executives and the board. But for credit unions looking to tap into the huge potential of the underserved opportunity and improve the financial lives of more consumers, it’s likely worth the effort.Leave a comment
By making a few key adjustments to your traditional lending products, you can make inroads with an entire segment of Hispanic borrowers looking for your services.
It’s no surprise that the Hispanic segment of the U.S. population is growing, increasing from 17 percent of the population in 2015 to an expected 29 percent in 2020 (according to U.S. Census figures). With that increase comes a growing demand for culturally-appropriate lending services, which is an exciting opportunity for credit unions looking to grow Hispanic memberships.
Access to credit is a key stepping stone for many Hispanic families, opening the door to greater financial and economic stability. Small-dollar loans also are a necessity for many Hispanic individuals, particularly those looking for financial help in completing the immigration and naturalization process. Without assistance, the application and processing fees associated with filing for U.S. permanent residency or U.S. citizenship can be out of reach for many immigrants.
By keeping a few key factors in mind when designing lending products, credit unions can expand the reach of their offerings to connect with Hispanic members and create lasting relationships.
By adjusting a few elements of your traditional lending process and products, you can better connect with Hispanic borrowers and create mutually beneficial and long-term relationships that drive growth. If you’d like more information on how Coopera’s staff can help you do that, please let us know.Leave a comment
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.
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 comment
I don’t think many of us were surprised to hear of Walmart’s unveiling of a new checking account with an $8.95 monthly fee and no overdraft or returned check fees. After all, the writing has been on the wall for some time, as we’ve watched the mega retailer dip its toes into financial waters.
What was less expected, however, was Walmart’s rollout of health insurance services this month.
So, who is Walmart targeting with these new products? We believe the target is a specific sector of its existing shoppers – the unbanked/underbanked and the uninsured/underinsured markets, and in particular the Hispanic market.
Unbanked individuals do not have a traditional financial institution account, providing a potentially large gap for Walmart to fill. As for the underbanked, these consumers may have a traditional savings or checking account; however they largely rely on non-traditional financial service providers, such as check-cashers and money transfer services, for many of their financial transactions.
Did you know that 1 in 12 U.S. households is unbanked and 1 in 5 U.S. households is underbanked? That’s a total of 34 million households in the U.S., according to the FDIC’s 2011 National Survey of Unbanked and Underbanked Households.
The health insurance market also represents a sizable opportunity for Walmart, as the U.S. uninsured rate is now at the lowest level recorded since 2008. For the Hispanic market, that means nearly 1 in 3 people are uninsured.
Why Walmart Sees Potential in These Markets
There is a misconception about the unbanked and underbanked market all being low-income, high risk and not profitable clientele. Walmart knows better. The U.S. unbanked and underbanked market does include low-income households, yet it also includes immigrants, young people, minority groups and single family households with financial needs.
These individuals spend much of their paychecks on pricey alternative financial services, to now include Walmart’s checking account and prepaid cards. (If you’re thinking $8.95/mo sounds pretty affordable amid news of rising fees, keep in mind the average monthly service fee for a non-interest checking account fell 5 percent to $5.26 over the past 12 months.)
A large percentage of U.S. unbanked and underbanked households are made up of Hispanics. Much of this stems from cultural preferences vs. a lack of financial stability. Hispanics are also the largest, fastest-growing, youngest and most underserved group in the U.S. with more than a trillion in purchasing power – a prime untapped market for credit unions.
One thing is for sure, profit-hungry Walmart would not introduce these products if it did not foresee strong potential. It’s clear their executives have identified the above consumer segments, many of which include Hispanic consumers, as a hot, untapped market. Credit unions must not acquiesce – these markets are tailor-made for the “people helping people” philosophy and are primed for generating tremendous revenue and membership growth.
As Scott Butterfield from Your Credit Union Partner notes in Credit Unions and The Ultimate Category Killer, “Overlook the Hispanic community at your own risk.”Leave a comment