LOS ANGELES – With the Hispanic population in the United States rapidly growing – and expected to become the majority in California within the next 20 years – credit unions need to be better prepared to market to this growing but relatively unbanked demographic. That is the advice of Harry Pachon, professor of public policy at the University of Southern California and president of the Toms Rivera Policy Institute, a Latino think tank affiliated with USC and Columbia University. "What is the bottom line. . . ?" he asks. "You have to know the Latino community. "Depending on the Latino community you have, you have sophisticated bank customers who are very familiar with the bank, you have first-time users and people who are newly arrived immigrants," he said. "So you have a segmented audience out there for yourself." Pachon said there are numerous myths and realities about the Hispanic marketplace. Among the myths is that most Latinos are low income, are culturally separatist and speak only Spanish. In fact, he said, a vast majority (86%) of young Latinos surveyed (those between the ages of 5 and 17) said they spoke English either "well" or "very well." In contrast, only about half the Latinos over age 65 said they spoke English. "It means that if you use any one language you're going to miss a segment of the population," he said. "If you use Spanish (only), you're going to miss younger Latinos." For that reason, he said credit unions should utilize bilingual materials, bilingual personnel and get involved in the community. "All the large consumer companies are going out for this market," he said. "Everybody is realizing that this demographic is going to grow." To emphasize that point, Pachon noted that more than half of all first-graders in California today are of Hispanic descent. "Those Hispanic first-graders are going to be your workers in the next 12 to 15 years," he said. Some 35 million Latinos are currently living in the United States, he said. That number is expected to nearly triple by 2050, when Latinos are expected to comprise 24.5% of the total U.S population. Pachon also said that credit unions should be aware of a growing Latino middle class which "is very significant." The middle class Hispanic market is often not noticed because economic figures are often skewed by combining incomes for new immigrants with native-born Latinos, he said. Pachon said large numbers of Hispanics in the United States remain unbanked, even those who have purchased homes. Of Hispanics earning less than $30,000 a year, 54% do not have any banking affiliation, he reported. However, nearly 99% of Hispanics who earned $50,000 or more annually do utilize the financial services of banks, he said. (Pachon cited bank statistics, saying there were no figures available for credit unions.) He said the results were similar when it came to credit card use. "Thirty-five percent of Latinos are still unbanked nationwide," he reported. "Even though they are unbanked, there is a tremendous profit margin to made out there and it is pursued very heavily by such companies like American Express and Western Union." Those companies, he said, are trying to capitalize on the burgeoning remittance market, which last year alone was said to total $10 billion sent to Mexico from immigrants in the United States. "There is more money going to Mexico from remittances sent by immigrants in the United States than there is in the whole petroleum industry in Mexico selling oil," Pachon said. He added that 50% of the entire foreign exchange in El Salvador comes from remittances sent primary by immigrants in Southern California. Pachon did not mention the International Remittance Network – IRnet – which is the credit union-based international money transfer service. Administered by the World Council of Credit Unions, IRnet allows money to be transferred to 39 countries for what credit union officials say is less cost than using companies such as Western Union or MoneyGram. "Credit unions are leading the way in reaching out to Hispanic Americans and to new Americans who have come here from countries such as Mexico, Guatemala and El Salvador," said David L. Chatfield, president and chief executive officer of the California Credit Union League. "Since about $10 billion is remitted to Mexico alone from U.S. residents every year, IRnet . . . is an ideal entry point for those who rely upon check cashers and expensive wire transfer companies to become part of the financial mainstream." Pachon said the remittance market could become a $15 billion a year industry. In trying to reach the Latino market, Pachon said credit unions should avoid "transliteration," or making literal translations of English to Spanish. He advised that translations should be done using high school level language. Even computer programs which promise to correctly translate sentences are often not infallible, he said. He cited one question about how many days were missed because a person was incapacitated which came out when translated, how many days were missed because the person was decapitated. -

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