Article originally published on Orlando Business Journal
There is a big financial opportunity out there. You just need to know a few facts to tap into it more efficiently.
According to the latest Federal Deposit Insurance Corp. report survey, 48.7 percent of Latino households were “unbanked” or “under-banked.” This means those families have never had an interaction with a financial institution or they have poor access to mainstream financial services normally offered by retail banks.
Since Hispanics are the fastest-growing consumer market in the U.S., that’s a huge chunk of business many banks are missing out on.
Hispanics have a growing need and demand for financial services. It is estimated that by 2020, one in five Americans will be Hispanic and by 2050 the gap will be even shorter, one in three. Banks and credit unions need to understand that marketing to Hispanics is not a passing fad. On the contrary, it is a long-term investment that will pay off significantly.
Banks and financial institutions generally face cultural and institutional barriers when reaching out to Hispanics. These challenges can be easily prevailed by understanding their needs, and knowing exactly what they look for in a bank.
If you really want to gain the business of this rapidly growing consumer segment, follow these five helpful tips:
Bridge the language barrier: Understanding the financial jargon in a native language is difficult enough. Understanding it in English is a major challenge for Hispanics among recent immigrants. Make sure to have employees in your branches that not only speak Spanish but also understand cultural nuances.
Share your knowledge: Most Hispanic immigrants are not familiar with the U.S. credit score system. Banks in South America operate in different ways and they do not have the same regulations. If you take the time to educate Hispanics about how they can achieve their American dream, you will score big at the end of the day.
Show you are trustworthy: Some Hispanic immigrants arrived from countries without a deposit insurance system. Some of them had a negative experience with financial institutions in their home country. For example: most banks in South America are not perceived as a reliable source because the government controls them. They can freeze your investments or savings during downfall economies. This is one of the main reasons why Hispanics prefer to carry cash and keep their savings at home.
Build relationships: For Hispanics, it is all about building a long-term relationship with the bankers. It is not just a quick transaction. This is where most banks fall short. They are more focused on opening new accounts or the amount of transactions instead of seeing the big picture.
Create a community feeling: Many banks claim their main priority is serving the local community by fulfilling their clients’ needs. A smart way to deliver on this with the Hispanic community is to have bilingual employees and collateral pieces available in their language. It’s also a great community outreach to sponsor Hispanic events and partner with Hispanic organizations — just make sure you have bilingual staff at your booths. Vendors who prove their commitment to this community will have a loyal following for years to come.
Financial institutions such us Bank of America, Citibank, and others are very successful in this market niche because they have combined basic banking services with an outreach mission. Their goals are to educate and serve the Hispanic community, making sure their needs are well covered. They have learned that by gaining the trust of Latinos, it secures them as loyal customers and also spreads a positive endorsement throughout their large and growing community. At the end of the day, that means more capital in any language.