This community presents a great opportunity for credit union to add members and to be ‘people helping people.’
Sponsored by CO-OP Financial Services
Every year, National Hispanic Heritage Month (Sept. 15 to Oct. 15) feels like a good moment for credit unions to consider how they might reach this growing market. It’s easy to see why: The Hispanic population topped 60 million in 2019, up 20% since 2010, according to 2019 population estimates from the U.S. Census Bureau. About one in five American consumers identifies as Hispanic. This is a vital and growing market.
But this year, we’re proposing we take things a step further. We believe credit unions can look beyond marketing and think about how they actually serve Hispanic members. Hispanic American consumers need more than effective outreach and clever advertising. They need partners in their financial success.
A Word About Our Perspective
Thanks to our work with CO-OP’s Diversity, Equity & Inclusion council, we’re enthusiastic advocates for reaching out and meeting the needs of diverse communities. We believe there’s strength in diversity and the complex understanding that comes from multiple life experiences and perspectives in the workplace.
We’re also immersed in the idea here at CO-OP that credit unions can build primary financial relationships with their members. This is not just about usage, products or lending, but also about building trust, loyalty and engagement. As we work toward developing new ways to help credit unions build these deeper relationships, we’re struck by the opportunity the Hispanic market represents—not simply as a source of potential members but, more importantly, as people who need financial partners dedicated to helping them succeed.
Hispanic Consumers and Our Current Reality
In 2020, it’s impossible not to consider the impact of COVID-19. Hispanic Americans—many of whom are essential workers—are experiencing a disproportionate rate of COVID-19 infection. The economic effects of COVID-19 seem to be disproportionate as well: About six in 10 Latino residents say they live in households that have experienced job losses or pay cuts due to the coronavirus outbreak, according to Pew Research Center surveys. Most surveyed did not have three months of emergency funds saved up, and half or more said they worry daily or nearly every day about financial issues like paying their bills, the amount of debt they carry and the cost of health care.
A few additional insights:
Hispanic Americans are entrepreneurial. According to a study from Stanford University reported on in USA Today, the number of Latino business owners grew 34% over the past 10 years, compared to 1% for all U.S. business owners. Latinos opened more businesses than any other group during this time period.
They’re aspirational. “[A] BofA study, conducted by Ipsos, found that 84% of Hispanic Americans say they’d like to learn more about financial matters compared with 69% of non-Hispanics,” The Financial Brand reported. “Investing and saving were the two topics cited most often by both Hispanics and non-Hispanics, but there was a particular gap between the two segments in two areas: learning about buying a home (23% Hispanics vs. 10% non-Hispanics) and using/managing credit (23% Hispanics vs. 14% non-Hispanics).” Here is a market that wants to do better financially and is eager to learn how to make this happen.
They’re undervalued. According to a Federal Reserve report, 11% of Hispanic consumers are unbanked and 23% are underbanked. Hispanic consumers were more likely to be denied credit or approved for less than they asked for: 45% of Hispanic respondents had this experience, versus 23% of whites. Hispanic respondents were also less likely to have a credit card, less confident they would be approved for a card and more likely to encounter problems accessing their funds than their white counterparts.
How Can We Be of Service?
In other words, Hispanic Americans are exactly the kinds of members credit unions were built to empower and serve. Here are a few ideas on how:
Recognition: Simply recognizing your Hispanic team members, credit union members and community members is an important step. It shows empowerment and respect to the community and also brings people together in a diverse environment. When you get different perspectives, different work and life experiences and different religious and cultural perspectives, you are stronger as an organization.
Representation: Want to build trust? Work directly with members of the Hispanic community. Whether they’re employees, focus group or council participants, or members or on your board of directors, there’s a dire need for representation. It’s also one of the fastest ways to get from point A to point B. You learn quickly and show respect when you go out to the communities you serve and have real-life conversations. How can you meet their financial needs better? What can you do to help? There’s just no better way to find out than asking.
Opportunity: Credit unions have a strong history of empowering members—providing access to financial services, helping members build credit, using alternative scoring models, offering financial education and more. Applying and adapting our historical knowledge and resources to the unique challenges of our Hispanic members is a strong move toward growth.
Partnership: What does it mean to have a primary financial relationship? One indicator is the use of non-traditional service providers like payday lenders. Some unbanked or underbanked consumers go to Walmart to have their checks converted to funds on a Walmart card. Walmart may be providing a financial service, but they aren’t in business to serve the holistic financial needs of these consumers. On the most basic level, providing access to deposit accounts, payments, credit, loans, financial education—everything your credit union already offers—is meaningful. It’s creating a path for members to have successful financial lives. From an inclusion perspective, it also expresses a sense of belonging. Listening, getting to know people, inviting them into your circle to represent their communities—these things make people feel like they’re respected and valued. They’re more likely to support and have a commitment toward your credit union as well.
Connection: Finding a common language is a definite trust-builder. Although a large majority of Hispanic Americans are born in the U.S., a significant percentage are most comfortable speaking Spanish. If you want to connect, having representatives who have the right soft skills to engage and interpret can help you overcome a baseline distrust of financial institutions. You might also invest in bilingual materials that really speak to this demographic and are easy for Spanish readers to use. Are you actually engaging with the Hispanic community? Are you finding noteworthy ways to serve your members? Social media can be an effective way to show your support to a wide audience.
Are you Ready?
We’ve written a lot here about what credit unions can do to serve the Hispanic market. This market may well be able to help you, too. The idea of listening to your members, adapting to their evolving needs, engaging and uplifting them isn’t unique. It’s an approach we’d recommend for serving everyone. Being a true financial partner is also something credit unions can do well. In a disjointed financial services marketplace, building primary financial relationships might be the ultimate differentiator. By inspiring credit unions to flex their people-helping-people skills, Hispanic American consumers just might empower us as well.
Rebecca Burns and Crystal Solomon are client business executives at CUES Supplier member CO-OP Financial Services, Rancho Cucamonga, California.