PONTE VEDRA, Fla. -- Does your credit union have a strategy for marketing to Hispanics? That may be your problem right there.
One expert who not only leads a banking unit targeted at the Latino community but who has also been a consultant to banks entering the market, cautioned financial institutions to recognize the Hispanic market is no more homogenous than any other market within the U.S.
Luz Lopez Urrutia, CEO of Banuestra Financial Corp., told the Retail Financial Services Symposium hosted by SourceMedia, parent to Credit Unoin Journal, that mistake No. 1 for many banks and CUs is taking their current product and service set, translating brochures into Spanish and hiring Spanish-speaking employees, and believing the job is done. Banuestra has 30,000 customers and is part of a 12-branch network branded separately and currently owned by Peoples Bank of Georgia. The unit has seen 30% year-over-year, same-store growth.
That financials are chasing Hispanics is no surprise. Lopez Urritia noted there are 42.7-million Hispanics in the U.S. as of 2005 Census data, with projections that figure will grow to 100-million over the next 45 years. What many in that target market are missing, she said, is the traditional documentation that is the core of any credit report.
Hispanics do not trust banks due to longstanding problems in their respective home countries. I did not trust the banks when I came to this country 22 years ago, she said, adding that about one-third of these consumers cannot read or write Spanish, and 75% or 80% cannot read, write or speak English. But this is a hardworking segment who are upwardly mobile, and they are savers, she said.
Lopez Urrutia said the Hispanic market has six distinct segments:
1) New Arrivals, who are often in U.S. three years or less, have a wife and kids in Mexico, work in construction, and live in an apartment with five to seven people
2) Settled Worker. In the U.S. for longer period, gets paid with W2. Has a banking account, but gets all of her services at a check casher.
3) Established Family. Children in U.S., but dont believe banks understand their needs, and even though they may have a free checking account at an FI, dont believe bank has products for them.
4) Jeffs (Supervisor or the boss). Has bank account, but is often undocumented. Saving money for own business. Uses check cashers.
5) Latino Small Business. Owns business. Has wife and kids in U.S. Has both a personal and commercial account with a mainstream bank.
6) Latino-Americans. Fully aculturated individual. I am part of mainstream, will tell you I still use phone cards and send money to my family in Mexico, said Lopez Urrutia. They are mostly U.S. citiziens, but there are still customs relative to financial services that we retain from our home countries.
Its important prior to serving Latino market to decide which segments of the market it wants to serve, she continued. Most banks well suited for segments 5 and 6. These consumers behave like a traditional banking customer. All of 1-3, and some of segment 4, need a different product set and different customer service model. Believe me, they can be profitable, and they are loyal and will stick with you.
What banks and credit unions must recognize, stressed Lopez Urrutia, is that the Latino consumer doesnt have the traditional credit score or a bank account with a lot of activity to show incoming and outgoing cash flow. Many Hispanics are looking for microloans of less than $1,000, a market in which many banks arent interested.
They dont have a payment history, but they do have good credit, she said. They do have documentation and represent excellent long-term relationships.
Although her company is a bank, Lopez Urrutia said, At Banuestra we turn the customer into a member. For the Latino consumer to have a membership card with a picture is very, very important. It gives us a sense of inclusion. As FIs, it gives us the chance to go through all the regulatory compliance steps. Once we have that member, we can offer all the different services we can offer the customer. We look at check-cashing activity so we can validate employment. While were building a relationship with this customer, getting them into doing transactions on a frequent basis, we are earning ancillary income from the relationship.
(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com
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