5 Myths About Hispanic Consumers
Every organization hoping to increase its reach with the Hispanic market must first understand its target. Five misconceptions held by business leaders today may be hindering progress for businesses, including credit unions, looking to serve Hispanics.
Myth #1 – All Hispanics are undocumented.
Many people are surprised to learn that of the country's more than 52 million Hispanics, most are native-born Americans and nearly three in four are U.S. citizens. It's important to acknowledge, however, that of the 11 million undocumented immigrants living and working in the U.S., about 9 million are Hispanic.
Undoubtedly citizenship is a goal for the individuals of this group, and credit unions are in an ideal position to make that dream become a reality. The proposed path to citizenship could mean a virtual opening of the floodgates for new credit union members.
Myth #2 – Hispanic foreign nationals cannot be credit union members.
Even before immigrants become citizens, however, credit unions can – and should – serve them. How can credit unions serve individuals without traditional identification?
Many financial institutions today accept alternative forms of identity to forge relationships with members of this powerful demographic. And in doing so, they are in full compliance with the Patriot Act and Customer Identification Program rules. These alternative forms of identity include the Matricula Consular, cedulas, passports and Individual Taxpayer Identification Numbers.
Myth #3 – A massive Spanish translation effort could take years.
Another prevailing misconception among credit union leaders interested in adapting their programs for Hispanic consumers is that they will have to translate into Spanish every piece of communication, including forms and disclosures. Thankfully, this is not the case.
It's important to understand that a strategic Hispanic growth plan begins by identifying the specific needs of the community and the particular target market a credit union is trying to reach. Spanish-language materials (or better yet bilingual materials) will only be required for those products and services deemed essential to the strategic Hispanic member growth plan.
Myth #4 – Only second-generation Hispanics are open to a traditional banking relationship.
Targeting second-generation Hispanics is an attractive strategy for credit union leaders who want to introduce their cooperatives to the next generation of financial service consumers.
What these leaders have found, however, is that often the best way into the favor of young Hispanics is through their parents. With Hispanics, especially, family and community ties are strong, creating a desire to do business with the same organizations that treat friends and relatives well. Therefore, it follows that high-value young Hispanics will come through the credit union door much more readily if their parents have already passed through it.
Myth #5 – Hispanics only want transaction-based products.
Something we hear a lot while on the road is: Hispanics are only interested in cashing checks and remittance transfers, which doesn't allow us to build long-term relationships.
Our research indicates the opposite: Product penetration is increasing at a faster rate among Hispanic members as compared to non-Hispanic members. An analysis of the median annualized product and service growth rates of Hispanic and non-Hispanic members for a group of Coopera credit union clients revealed:
Checking penetration: The median Hispanic growth rate (5.5%) was more than three times the median growth rate (1.7%) for non-Hispanics.
Loan penetration: The median growth rate for Hispanics was 4%, higher than the median growth rate for non-Hispanics of 3.4%.
Services per member: The median growth rate was 1.5% for the Hispanic segment. This is almost twice the median growth rate (0.8%) of the non-Hispanic segment.
To grow, credit unions must make a strategic effort to overcome misconceptions, dig deep into the data and understand how a relationship with their local Hispanic communities can create a bona fide win-win.
Miriam De Dios is CEO of Coopera in Des Moines, Iowa. She can be reached at 1-866-518-0214 or email@example.com.