AUTUMN 2002

Banking Latino Immigrants

How to Market to Latinos

Electronic Transfer Accounts
Bring Banking to the "Unbanked"

Tax Refunds Start Ball Rolling

Spanning the Region

Have You Heard

Calendar

How to Market to Latinos
Techniques for reaching the Latino immigrant population

Personnel

• Employ bilingual, Spanish-speaking staff. Start out with tellers and new account representatives because they are encountered first by customers upon entering the bank. Hire people from the branch’s immediate community. Immigrants will feel more at ease with people they know. Churches that offer bilingual services can help with recruiting, as can community groups.
• Provide sensitivity/diversity training for bank personnel. Instructing employees about the cultures of prospective customers will make the employees more comfortable working with Latinos.
• Pay your bilingual staff fairly. Speaking another language is a sought-after skill.

Community Involvement

• Become involved in community groups. Find out which group is the most effective at reaching out to the Latino community. Ask the group to refer its clients to you. William P. Selenke, vice president and Kansas City district manager for U.S. Bank, speaks from experience. “We go into the community as much as possible to find customers. We go to businesses to open accounts for employees and make presentations for community groups.” Ask community groups how you can work to overcome any perceived obstacles to doing business with your bank. Many Latino immigrants distrust banks because of bad experiences in their countries of origin.
  
• Offer financial education classes to community group clients. Many organizations offer English as a Second Language (ESL) classes. Offer low-cost accounts with bonuses, such as free checks for ESL students who attend a series of financial education sessions. The FDIC offers Money Smart, a comprehensive financial education curriculum in Spanish. It encompasses 10 modules that cover everything from opening a bank account to understanding credit reports to obtaining a home loan. Money Smart offers a scripted course that has proved easy to teach. Order it free at FDIC’s web site at www.fdic.gov/consumers/ consumer/moneysmart/index.html.
  
• Talk to your regulator’s community affairs office for help with reaching Latino communities. Chances are that the office has already started an initiative that you can latch on to. Ask about linking some efforts with CRA credit.
  
• Do not limit yourself to helping with the local Cinco de Mayo celebration. Sponsor booths at ethnic, cultural and religious festivals. Attend community and neighborhood association meetings. It’s a good way to find out about your new market and its needs. You will build a network and meet the community movers and shakers.
  
• Partner with a faith-based organization. Offer to give a presentation to its members on budgeting or another financial education topic. Advertise in its bulletin. A church in the Back of the Yards neighborhood, a historic Latino neighborhood in Chicago, partnered with banks to provide free tax preparation to the community.
  
• Embark on a school partnership. Sponsor school events. Arrange a field trip for children to visit the bank and open accounts for them. The children will bring their parents to the bank and will remain loyal customers to you when they grow up.

Branch Design and Services

• Design your branch in a friendly and appealing manner. Marble floors and Greek columns will not make your new clients feel wel- come. A Georgia bank that wanted to serve Latino workers at a chicken processing plant designed one of its branches with an open plan, Mexican tile floors, colored neon signs over every department, a play area for children and free coffee.
  
• Some banks establish branches inside shopping malls frequented by Latinos or businesses that hire significant numbers of Latinos. A rural Kansas bank set up a branch and an ATM inside a meat packing plant that employs 600 Latino workers. Other banks send personnel to employers. If you bank the employer, you have a conduit to its employees. Offer to cash employees’ paychecks. Your staff can then market accounts to them. Cater to merchants in Latino business enclaves. They may become an excellent source for business and other loans.
  
• Offer convenient hours. Find out what hours people work at major employers and tailor your hours of operation to employees’ free time.
  
• Be careful about translating documents. Make sure the translator is aware of the particular dialects of your Latino group. Have people from churches, community groups and your own staff who are representative of the nationalities you wish to serve review for clarity and for any offensive language.
  
• Make your electronic services bilingual. Offer Spanish language options for your telephone banking, ATM screens and web site. “Pushing for our voice response to be in Spanish was a positive move for Industrial State Bank,” Stephen Galvan, senior vice president, says. “It gave us the ability to communicate in Spanish 24 hours a day.”
  

Products

• Design products that your customers want. Don’t rely on traditional products to persuade new clients. Survey community groups that work with Latinos and ask them what’s needed. Invite several local Latino residents and businessmen to an evening chat with refreshments at the local church or group headquarters. You will get valuable information and, most likely, several new customers.
  
• Latinos tend to be loyal to businesses that treat them well. Because many have been tricked into bad deals, especially when they first arrived in this country, they may be reluctant at first. However, if you are perceived as trustworthy and willing to offer them good products, they will be loyal customers. Latinos tend to be conservative with their money and avoid risk. Recognize that there are different groups within your Latino clientele: more-established immigrants, new immigrants, second generation Latino youth. They all need different products.
  
• Offer package deals and services. Many immigrants send money to relatives in foreign countries. Low-cost wire transfers and free calling cards can be offered along with new accounts tailored to their needs. Offer products such as Individual Retirement Account certificates of deposit (CD) for those customers who have sub- stantial amounts to deposit. Be innovative—a Connecticut credit union baby-sits children while clients are closing on mortgages.
  
• Consider using alternative underwriting guidelines for your products. Many clients may not have a credit history established. Use rent and utility payments in lieu of debt payments. A Missouri bank offers a CD secured loan. The client deposits a CD with the bank, the bank extends a loan for the amount, the client pays it off in a year or two, and then gets to keep the interest. This product helps customers create a favorable credit history and a savings pool.
  
• Start wary clients, those uncomfortable or unfamiliar with the workings of a checking account, with a savings account. Offer free or reduced money orders with it so that they can pay bills. This will ease the transition from a check-cashing outlet, reduce the risk for your bank and earn you a satisfied customer.
  

Toward the Future

“The Latino community needs increased access to mainstream financial services, and financial institutions clearly face an opportunity to increase their customer base by marketing their products and services to this growing segment of the population,” says Glenda Wilson, Community Affairs Officer for the Federal Reserve Bank of St. Louis. “Banks may overcome cultural barriers that can discourage Latinos from establishing a banking relationship by becoming engaged in their communities.”

The Latino immigrant population holds promise for financial institutions wishing to take the quantum leap into this growing new market.

¡Mucha suerte!

A “Lending Avenues for Latino Immigrants” workshop is scheduled Dec. 5 in Kansas City. The workshop is cosponsored by the FDIC, the Office of the Comptroller of the Currency and the Small Business Administration. For information, call (816) 234-8158.

See main article: Banking Latino Immigrants

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