FARMERS BRANCH, Texas - What is a credit union? Is it not thesame as a bank? The Texas Credit Union League launched a series offocus groups in March of this year not only to gauge awarenessamong Hispanics about credit unions, but also to probe theirperceptions of the U.S. banking system. The findings: less thanhalf of first-generation Hispanics know the difference betweenbanks and credit unions. TCUL and its partner, Texas Appleseed, anon-profit organization that leverages attorney pro bono resourcesto support broad social change initiatives benefiting low-incomecommunities, teamed up with local Hispanic organizations to conductfocus groups for first-generation Hispanics in six target markets:Dallas, Fort Worth, Austin, Houston, El Paso and Rio Grande City.The majority of the 63 participants (79.4%) were born in Mexico.According to the report, "Qualitative Study of the BankingExperiences of Latino Immigrants in Texas" prepared by Rincon &Associates, more than half of focus group participants said theyuse nontraditional financial services providers such assupermarkets and check-cashing agencies, in part because financialinstitution fees are too high or their services are inconvenient.Of those that do have an account, 38% said it is with a bank andonly 4.8% use a credit union. Other reasons cited for not having abank/credit union account included mistrust of the U.S. bankingsystem, non-acceptance of the matricula - a form of identificationissued by Mexican consulate offices in the U.S. - fear of exposingtheir immigration status and lack of information provided inSpanish. Saving for the future? Most feel the instability of theireconomic status leaves little money to budget and save. The mostcommon practice among focus group participants is to spend moneyearned immediately on basic needs, such as food and housing. TCULCommunications Director Linda Webb- Maon said many of the focusgroup participants believe it is actually cheaper to use checkcashers and payday lenders. "The very financial service providerswe are trying to steer them away from, are the ones they areturning to for their financial service needs," Maon said. "Clearlysuch providers are filling an immediate need. However, we stronglybelieve that in order for them to build financial wealth, arelationship with a financial institution that is working for theirbest interest is essential. Without this, we believe their questfor the American Dream will be difficult." Hispanics generally holdpositive views of U.S. financial institutions, but 52.4% of therespondents were unfamiliar with credit unions. Also unknown to amajority of the participants was the Spanish translation"cooperatives de credito," highlighting a need for credit unions toevaluate what term they use in marketing credit unions toHispanics. Latinos who used banks or credit unions most often takeadvantage of savings and checking accounts, credit cards, and ATMs.Although most of the Latinos indicated they had access to limitedcredit, department store credit is the most used form of credit.Credit from financial institutions is used less frequently topurchase cars or to finance home-related expenses. While 57.1% ofthe participants indicated it was "very important" for banks andcredit unions to support money transfers and direct deposits tobank accounts in Mexico, only 1.6% of the respondents currently usea credit union for that task, suggesting a need for greatermarketing of these services on the part of credit unions. Themajority of respondents rely on private services like WesternUnion. Maon pointed out that while focus group participants mightlack financial knowledge (only two of the 63 study participants hadever received financial instruction), the majority - 85.7% -expressed interest in learning more about money management. Topicsof interest included how to organize finances within a budget; howto manage a savings/checking account; how to build credit; andunderstanding the home buying process. Texas Appleseed becameinvolved in this initiative through their connection with CommunityResource Group, a non-profit community development organizationthat has worked with low income Hispanics in the "colonias" alongthe Texas-Mexico border. Together, they studied the remittancemarket, looking for ways to expand immigrants' access to financialinstitutions. "As we helped colonia residents build assets byproviding home improvement loans and titling assistance, werecognized the need to help them obtain affordable, safe financialservices," said Rebecca Lightsey, CRG Colonia Program Director."The Appleseed/CRG goal in carrying out the focus groups was toidentify opportunities and document barriers to mainstreamfinancial institution participation of lower income Hispanicimmigrants in Texas. We see moving the unbanked Hispanic communityinto the financial mainstream as a win-win situation. WithTexas-specific data, financial institutions will be better able toserve this growing population," she said. "We are excited tocollaborate with the Texas Credit Union League on this project andhope that the information will serve as a catalyst to increase thenumber of Texas credit unions focused on serving the Hispanicimmigrant population, as well as their capacity to do soeffectively." The study flagged several areas for improvement bycredit unions: acceptance of the matricula and a move away fromasking for documentation related to legal status; making loanstandards more flexible - consideration of "no credit" versus "badcredit;" better explanation of fees; and creation of a friendlierenvironment. Just because a financial institution has bilingualemployees does not ensure those employees are making inroads withthe Hispanic community. Latinos in three of the six markets notedthat they had been discriminated against by Hispanic employees offinancial institutions who, even though they had the skills, werereluctant to communicate in Spanish or who treated them lessfavorably than non-Latino customers because of how they looked.Empowered with this information, Maon hopes Texas credit unionswill have a greater understanding of the needs of the Hispanicmarket, and be in a better position to serve this largelyunderserved segment of the population. Practical application of thefocus group findings might translate into such modifications incredit union services as: offering free checking, providing meansof accessing money in U.S. accounts by relatives in Mexico,providing weekend services, or pushing to ensure that effectivebilingual/cultural services are in place within credit unions. Thefocus groups are one component of a much broader Hispanic outreachprogram funded by TCUL, the Texas Credit Union Foundation, theNational Credit Union Foundation, Texas Appleseed and VigoRemittance Corporation. -

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