Page 11 - Perspectives Vol.15 Issue 2

Products and services must also represent your institution’s dedication. Hispanics face income challenges, which affect their ability to save, borrow, and invest. In addition, they are much more likely to support family members and friends through rough financial patches, so offering flexibility in loan repayment plans can be an attractive benefit. Designing investment and savings programs that are specific to their income and their needs is important. It will require a low barrier to entry and quick, easy access to funds, because convenience is a top priority for Hispanics.
Prudential’s findings suggest personal debt is culturally taboo in the Hispanic community. A full 62% of Hispanic respondents asserted “good debt” does not exist, while 49% preferred to pay cash for an item or not buy it.
The reality is that 69% of respondents understand it’s nearly impossible to live without debt, which creates educational opportunities for financial institutions. For example, 77% felt it acceptable to borrow for large purchases, such as homes, cars, college, or a business. Because of their cultural mores, many Hispanics have thin or no credit files. Your credit union can show them how to build credit responsibly to better grow their assets.
According to MediaPost, financial services firms devote less than 2.5% of their total marketing spend focused on the Hispanic market, and that is skewed upward by a few banks that are heavily investing. This minute level of spending stands in contrast to the economic realities. Hispanics drove 38% of aggregate consumer spending from 2002 to 2012, and that number is growing. Hispanics also account for 52% of homeownership growth since 2002, with a net gain of 2.8 million homeowners compared to a net decrease of 85,000 homeowners among Caucasians.
Hispanics are not necessarily unbanked or underbanked. According to the FDIC, 48% of Hispanics in the U.S.
are fully banked, while just 18% remained unbanked. This means they’ve become more accepting of financial institutions and should be viewed as a core growth market segment.
Providing financial counseling builds credit unions’ role
as trusted advisers. Sessions and informational materials
can be in English and Spanish. Marketing, as well as
the composition of the institutions’ employees, should demonstrate diversity, Spanish-influenced music, and imagery. And don’t neglect social media. Hispanic adults are the most active of all ethnic groups on social media at 72%.
Financial institutions must also tell the story of how convenient they are, and it must be backed by flexible access, targeted products and services, and incentives, such as lower interest rates after so many on-time loan payments. Marketing should express that the institution exists to provide fast and easy access to the right products at the right times to reach this increasingly critical market segment.
The Hispanic community is a young and growing segment in the U.S., with hopes of making a better life for themselves and their families. They are becoming more accepting of financial institutions and recognize, while they culturally don’t approve of debt, it’s difficult or impossible to live debt-free.
They have certain challenges, such as higher unemployment and lower income levels than other segments, but this provides opportunities for financial institutions to assist. First, the institution must be trusted, which means becoming entrenched in the community and cultural norms, and then sharing that messaging through financial education, activities in the community, marketing, and service.
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