Reaching Hispanics is a major focus for many credit unions across the country. Developing an outreach to a new member population typically poses new dilemmas, but the cultural differentiations within this prominent segment of the immigrant population require even more consideration. According to the Pew Research Center, the population of the United States will hit 438 million in 2050. Pew attributes the majority of that increase (82%) to immigrants and their U.S.-born descendants. These immigrants and their families represent varying areas and cultures and speak vastly different languages, but they are all confronted with similar financial realities when assimilating into the United States.
Trust Presents an Obstacle and an Opportunity
To serve foreign-born individuals, credit unions must first gain their trust. Some immigrants distrust financial service providers because they come from countries with unstable financial systems or they have had bad financial experiences. Some want to establish a financial foundation but do not have the requisite paperwork. Many immigrants without proper documentation are wary about opening an account because they fear their financial institution will alert the government. Trust is a vital component in ascertaining a potential member’s correct identity. Credit unions that gain the trust of their foreign-born community reap the benefits. These individuals are underserved, are younger than the general population, are more likely to remain loyal, and will spread word-of-mouth endorsements to others in their community.
Community Involvement is Important
Credit unions that want to expand their member base with local first generation populations must establish a presence within that community. One way to do this is to develop a strategy that uses multiple channels. Form partnerships with local political or civil leaders and community organizations, provide financial education opportunities, sponsor special events such as a cultural heritage festival or a local soccer tournament, and volunteer at functions supported by the population you are trying to reach.
No Credit Does Not Mean Bad Credit
Overcoming the lack of a conventional credit history is a major financial barrier for many foreign-born residents. A FICO score will not provide an accurate picture of their credit history, so in order to serve this population, credit unions need to embrace innovative, flexible underwriting guidelines. Consider alternative sources of financial data and look at their history of meeting financial obligations in areas such as utilities, telecommunications, rent, childcare, and insurance for health, auto, home, or rental. If the individual has a job, fulfills his or her financial obligations every month, and has no bad credit, the credit union might simply need to rely on judgment and ask, "Is this a good loan?"
Credit unions must also accept a variety of documents to establish identification. A social security number is not necessary to open many financial accounts. Foreign government issued IDs, passports, driver's licenses, INS documents, foreign military ID cards, foreign voter registration cards, birth certificates, marriage certificates, or school records are all acceptable forms of identification. An individual tax identification number is provided to all U.S. residents who file income taxes but are not eligible for a social security number and is a popular form of identification.
Specific Products and Services
Businesses offering international money transfers, check cashing, and payday loans generate more than $4 billion in fees annually. Unfortunately, these businesses are where many immigrant populations perform their financial transactions. In order to serve the foreign-born population, credit unions need to offer in-demand products and services, such as wire transfer and remittance services, payday lending alternatives, small loans, and check cashing. By offering such services, credit unions have the opportunity to establish a relationship with the population and ease them into mainstream accounts.