Amplify Credit Union in Texas has ramped up its efforts to serve the growing Latino market in its Austin market with Spanish-speaking staff who can provide assistance to those members.
Some banks and credit unions once primarily served the Latino market to placate regulators or show support for the communities in which they operated. But as the Latino population grows, so does the case for businesses to meet it.
The US Latino population is set to reach 62.5 million in 2021, or 19% of the country’s total population – up from 13% in 2000. By 2060, that is projected to increase to 111.2 million people, or 28% of all residents, according to UCLA Latino Policy and Politics Institute,
“As a Texas-based institution, we would be crazy to ignore the growing potential of the Latino market,” said Stacey Armijo, chief experience officer at Amplify Credit Union in Austin.
In an interview, Armijo said that Latino’s strategy to serve is multi-pronged and includes developing long-term mortgage demand and supporting stable exchange earnings.
Mortgage debt accounts for the bulk of the $1.5 billion asset Expand Credit UnionIn today’s loan portfolio, and Armijo said the company expects mortgages to drive the most growth going forward.
According to the National Association of Hispanic Real Estate Professionals 2022 State of Hispanic Home Ownership ReportDespite homes being less affordable, the demand for and readiness for home ownership among Latinos is on the rise.
Armijo said, “Since we must always go where the puck is, prioritizing Latinos among the homeowners we want to serve long term only makes sense to increase revenue through our core product. “
But there are challenges too.
For example, Armijo said Amplify has limited Spanish-language capabilities. The credit union has Spanish speaking team members who can provide assistance to those members, but all documentation is still in English.
Armijo said, “That being the case, we do not market in Spanish… because we do not consider it fair to solicit interest in one language and then need to switch to another language for fulfillment.”
Armijo said that requiring a customer to be fully serviced in a particular language – and then failing to do so – could be viewed by authorities as an unfair, deceptive or abusive act or practice.
Chris Nichols, director of capital markets at the $45 billion in assets Southstate Bank in Winter Haven, Florida, said banks of all sizes have noticed the growing prominence of the Latino population.
But in general, in terms of financial education and communication, more banks may be better able to reach that demographic, he said in an interview.
This, he said, could include doing more business in Spanish, given that it is the first language for new Latinos in the country. This means hiring Spanish-speaking bankers who not only know the language but are also familiar with cultural norms. It may also mean providing Spanish versions of websites, automated-teller-machine greetings, customer letters and other communications.
“It’s also a reminder that many banks need to do a better job in the area of financial education,” Nichols said. “Part of this may mean communicating in native languages, but part of it is recognizing that whether you are trying to reach the underbanked or the wealthy – regardless of demographic – we need to connect people to their Need help understanding the options.”
“It’s important for everything from small business formation to payment products to investing for retirement. Bankers can help with all of this and more, but to make it happen we need to connect with people,” Nichols said. needed.”
Last week during the annual summit of the National Association of State Credit Union Supervisors in Nashville, Tennessee, a panel discussion revolved around serving the Latino community.
A panel during the NASCUS Summit discusses the opportunities and challenges of serving the Latino market. From left: Jose Gonzalez, Diego Aguirte, Martha Silva and Mario Avila.
Panelists said financial institutions need to pay attention because Latinos are the fastest growing demographic market in the country.
From 1996 to 2020, the percentage of Latino entrepreneurs in the US more than doubled, from 10% to 22%, said Mario Avila, president of the $49 million Vanderbilt Credit Union in Nashville.
Before the pandemic, only about 3% of Latino consumers were using digital cards to make payments, Avila said, but that number “has grown significantly.” “So as we look to drive down costs as a credit union and try to move away from the brick-and-mortar model, it’s an interesting demographic to watch.”
CEO of Amplify Kendall Garrison said the credit union is actively working to improve its offerings for Latinos by deploying community bankers and lenders “who basically have a responsibility to take our products and services to disadvantaged communities, not People need to come to us.”
Some might say that chasing the Latino segment is unwise because Its average deposit balance is lower than other groups — but according to Amplify’s Armijo, those critics are missing an important part of the picture.
Essentially, lower balances equate to higher exchange earnings, Armijo said. Average interchange earnings per month on Amplify are almost twice as high for members with deposits of less than $10,000 compared to members with deposits of more than $250,000.
The reasons for the correlation are not clear, but Armijo said that customers who carry higher balances are generally less likely to use debit cards issued by Amplify for daily transactions and less likely to make payments with those credit cards. are more likely to be those that offer attractive prizes – and are issued by other financial institutions that collect the fee income.
“We believe that focusing on serving Latinos is not just about improving equity in financial services, it is a smart business strategy that will be key to our future growth,” Armijo said.