Nothing makes marketers’ ears perk up more than the words “untapped market.”
Add the sound bite that it accounts for 16.3% of the United States population, roughly some 50 million people, representing the largest and fastest growing minority group and it’s no wonder credit unions have been trying to figure out ways to serve the Hispanic market.
“The credit union industry as a whole is facing a big challenge of lack of growth or stagnant growth. So when one out of six people is Hispanic and while studies point to different numbers, but it’s estimated that roughly 50% of Hispanics is underserved or underbanked -- that’s a pretty big opportunity for growth,” said Miriam De Dios, vice president of Coopera Consulting, a subsidiary of the Iowa Credit Union League and a CUNA strategic partner that specializes in the emerging Hispanic market.
De Dios said many times, credit unions go after those who have already established accounts elsewhere or are bank customers and those are typically saturated markets.
“If your credit union has an untapped, largely ignored market locally then why not spend your time more effectively?” De Dios said.
For the past four years, Traci Stiles, business development manager at the $42 million Des Moines Metro Credit Union in Iowa has been slowly making inroads in meeting the needs of underserved Hispanics in the communities served.
“We saw this as a way to grow membership and while we market mainly to first generation Hispanics who are primarily underserved, what’s happened is that by reaching out to the whole community, we’ve also seen growth in both the second and third generation.”
When a demographic study of the local metro area revealed a majority of underserved Hispanics actually lived around Des Moines CU, Stiles said it just made sense to incorporate the marketing in its strategic growth plans. That meant laying the groundwork, creating policies and procedures.
“Once we saw the opportunity, the key was to get buy-in from the board, management and every employee so we made sure to communicate how this would benefit the credit union in terms of member growth and being able to develop better products and services for our all our members,” Stiles said. “I found that a lot of our products could be repackaged and offered to this demographic. The needs are the same it’s just some policies had to be adjusted.”
For example, instead of previously requiring a member to have a minimum credit score, the debit card policy has been changed to allow those without any negative activity on their credit reports. Stiles said the modification has been an added boon in terms of appealing to and better serving younger members.
Equally successful with younger members and the underserved Hispanics has been its credit builder program dubbed Logra Credito. Members can get their first loan for $500 and if they pay it off in full in six months, they are then eligible for a $1,000 loan for 12 months. After that, members can build up enough credit to qualify for a credit card or a larger personal loan.
“It’s a step by step process that makes sense for those Hispanics with I-10s but it benefits all members who need to build their credit,” Stiles said.
A ITIN or individual taxpayer identification number allows those without a social security number to file an income tax return.
At the $274 million Greater Iowa Credit Union in Ames, Iowa, Michael Adams, vice president of marketing/public relations, describes his outreach efforts as a marathon more than a sprint.
“To give you a sense of background on why we consider it important is that of our six total branches, three have a significant Latino member base,” Adams said. “Of course we want to appeal to all but we can do something to help the unbanked here who are Mexican, Salvadoran, and Ecuadorian and are distrustful of banks.”
In Denison, which is a rural area in Western Iowa, 40-45% of Latinos work in the meat processing plants, Adams pointed out. On the east side, in the manufacturing, blue collar section of the city, it’s about 20-25% Latino.
Adams said the outreach initiative began about four years ago and although it’s gone from knowing the credit union had some underserved Latino members to developing a comprehensive strategy, there are still many untapped areas.
The majority of Greater Iowa CU’s efforts have ranged from changing its policies to include international identification, accepting the Matricular card as primary identification and offering a remittance service, Adams said. The cooperative has also hired bilingual staffers for the three branches in underserved areas and offered financial education in partnership with local churches and community and professional groups such as Alianza Latino for business owners.
“It’s a community that culturally, is family oriented and to a great degree, is building its own community. One thing we’ve found is that loyalty plays a large role in the family approach to financial institutions and if they feel they can trust us then we’ll have a member for life,” Adams said.
“Adams said the credit union’s East Des Moines branch went from 15% to now over 20% of the membership being Latino. In its West Iowa branch, Latinos are now 35-45% of the membership.
De Dios added that the same rules of researching and knowing as much about the credit union’s members also apply to the Hispanic market. Check any and all assumptions at the door, she offered.
“The biggest misperception about the Hispanic market is that all Hispanics are illegal or the majority are, so credit unions can’t legally serve them and it simply is not true,” De Dios said. “Any market can be broken down into various segments. Hispanics are not all first generation, Spanish speaking or unbanked. I will say it is where the largest opportunities lie.”
Because the Hispanic market is the most ignored and untapped, De Dios sad it’s easier to acquire those as opposed to someone like her, who is more like the second generation.
“I have multiple accounts at banks and credit unions and it’s harder to get me as your member than my parents. Actually if you serve my parents well, not only are they a very loyal group but you may change my perception.”
She said another barrier has been the idea that serving a new market equals a large investment to create new products.
“Honestly, it comes down to outreach. Marketing grassroots work well and you can reach the market quite cost effectively,” De Dios said. “In the jump to collateral or web and advertising campaigns, we can sometimes forget about the entire member experience.”
De Dios said if a credit union is going to point to their website and have Spanish there, then make sure the branches have bilingual staff, the automated phone system has a Spanish option and follow-up materials are available after a new account is opened. If it’s not a coordinated effort it will affect the feel and perception a credit union is trying to build with members in terms of experience, she suggested.
It also pays for credit unions to understand their local demographics and market, De Dios said. While much of the national data on Hispanics state the majority are Mexican overall, on the east coast it might be Puerto Rican or Cuban and each has their own cultural differences.
“When it comes to the type of messaging and images avoid, being stereotypical. It seems like common sense but I can’t tell you how many times I’ve seen a chili pepper or sombrero associated with the Mexican population,” De Dios said.
Television, print or radio ads should represent the local demographic, she recommended. De Dios said so if it is Mexican, then avoid using talent from Spain or Argentina because you can tell from the accent. The result will be the opposite of what you want because they’ll feel like you don’t understand that member’s culture, she added.
Along those lines, translations should also be culturally relevant so be cautious when outsourcing translators or tapping bilingual staff to translate credit union terms. Information such as how to become a member and the process involved should be as transparent and clear as can be.
“It’s also important when marketing products and services [that] what you’re promoting is relevant to your market. A good referral program as part of this effort; word of mouth is certainly an effective grassroots tool that works very well with the Hispanic market,” De Dios said. “Again, it depends on how you segment the market.”
She added that with a median age of 27, and with one in five children born being Hispanic, the overall market also represents a younger demographic.
“Don’t forget the entrepreneurs,” De Dios said. “Hispanic businesses are growing at three times the rate of other groups. So you’ve got to think in terms of not just focusing on owners but employees and customers as well. It boils down to laying a solid strategic foundation and the four ps of personnel, processes, products and promotion and looking at all areas with a slightly different lens than you do for traditional members.”