Latino Community Credit Union ($115M, Durham, NC) has long been heralded as an exemplary community development credit union because it caters to an underserved immigrant population. But it also serves as a classic example of building wallet share by identifying an underserved market, investing in it, and evolving alongside it.
A construction boom in the mid-1990s initially attracted many Latino workers to Durham, and over the past 15 years, the Latino population has multiplied exponentially. According to the US Census Bureau, Latinos currently constitute 14% of Durham’s population compared with just 8% for North Carolina as a whole.
Because of the cash they carried on them, the new immigrants suffered a wave of muggings and robberies in the 1990s. The solution was to offer these workers a safe place to store their earnings, and in 2000, the Latino Community Credit Union was born.
Although other credit unions in the area offered their help, they lacked the resources, such as a bilingual staff, to cater to this new demographic. “They didn’t have the front office ability to communicate and understand the cultural nuances of the population,” says Erika Bell, vice president of strategy and services, who joined the credit union two years after it was founded.
In the beginning, State Employees’ Credit Union ($25.5B, Raleigh, NC) assisted Latino Community with processing its back office duties so that the fledgling co-op could focus on fulfilling its front office needs.
Although the majority hails from Central and South America, Latino Community’s members come from more than 100 countries. What they all have in common is that they started out as newcomers here, unfamiliar with the US financial system or the concept of establishing credit to build wealth.
One of the biggest hurdles of serving this particular market is teaching these individuals how to access their accounts. When they first arrived, many members had little experience using an ATM or a debit card and didn’t understand how to manage their finances through online and mobile channels. But when someone becomes a member, Bell sees that as an important sign.
“Once somebody opens their checking account rather than coming in to cash their check every week, that’s an indicator to us that they’re more fully invested in understanding how to navigate the financial system,” says Bell, who also oversees financial education at the credit union.
If Latino Community Credit Union has a deep understanding of its market, that’s because most employees, all of whom are bilingual in English and Spanish, share similar backgrounds with the members they serve.
“The majority of our staff are immigrants themselves and have experienced being new to the country, and learning the US financial system,” says Bell.
That understanding allows the co-op to make concessions other financial institutions wouldn’t consider such as working with members who don’t have a traditional credit history. Latino Community employees are trained to look at other factors besides a credit score, including whether the member pays rent and utility bills on time.
“Because our staff reflects the membership we serve, they’re able to create really strong relationships with the members,” Bell says. “I think that has been the key to us increasing wallet share and lending production.”
One of the biggest misconceptions of Latino immigrants is that they’re only in this country short term and have no interest in qualifying for more sophisticated financial products such as mortgages or auto loans.
“Often, credit unions who want to reach out to the Latino community think that they only want basic services, like remittances and cashing,” says Bell. “In our experience, a lot of people do want to settle here and set down roots, especially through home ownership.”
In fact, the bulk of Latino Community’s income is from its lending products, which are evenly split between mortgages and consumer loans. As members became more financially sophisticated, the credit union evolved with them, anticipating their needs.
“Once people started saving their money, we introduced more sophisticated products,” Bell says. A member who started out years ago with only a checking account may now be in the process of buying a home or may have purchased a car.
“We have members who have been with us for 10 years, so they’re demanding different kinds of education and products,” Bell says. “We want to make sure that we continue to grow with them, so that we can help them build wealth in their communities.”