Credit unions and financial institutions are facing an increasingly competitive market for attracting and retaining members from their “traditional” customer base. This has caused many credit unions to merge, be acquired, or even close their doors. However, a lucrative opportunity in a rapidly growing and severely underserved market should not be overlooked. Serving the Hispanic market may make the difference between a credit union thriving, or being left behind.
Why is the Hispanic community a great market for credit unions? The first reason is demographics. So while the overall white population has declined, the Hispanic community is one of the fastest growing groups in the United States. There are over 61 million Hispanics in the United States, comprising over 18% of our country’s overall population. The United States actually has the second largest population of Hispanics in the world. Very important to understand, is the rate of growth of the Hispanic community. Between 2010 and 2019, they accounted for over half of the U.S. population growth. The immense size and growth rate of this community should be noticed by credit unions in exploring new markets to serve.
The second reason is that in spite of these statistics, the Hispanic community is severely underserved. The FDIC estimates that while overall 5.4% of U.S. households were “unbanked”, which means no household members have either a checking or savings account at a bank or credit union, over 12.2% of Hispanic households were unbanked. This means there are millions of Hispanic households that can become future credit union members and are in need of the services they provide.
So why could a growing and underserved Hispanic market be a lucrative opportunity for credit unions? The third reason is the growing economic power of the Hispanic community. In 2018, the U.S. Hispanic GDP reached $2.6 trillion. This means that if the U.S. Hispanic community was its own country, its GDP would be the eighth largest in the world, and larger than any economy in Latin America. So while the overall population sees an average wage and salary growth of 5.1%, Hispanics actually have seen an average wage and salary growth of over 8.6% due to high labor participation and educational attainment rates. They have been flexing these growing economic muscles through increased consumption. Between 2010 and 2018, Hispanics increased their personal consumption 133% faster than the non-Hispanic community.
So how can credit unions better serve this market? Very simply, the first step is to overcome language barriers. Having a website and marketing campaigns in Spanish will help communicate the value of your credit union in a language with major cultural significance to the community. Also make sure to hire people who can speak and write Spanish in order to provide your services to those whose English is not proficient or their native language. Then, partner with organizations like non-profits who serve the community or Hispanic consultants who understand how to craft your message in a way that is compatible with Hispanic values goals. Finally, establish a physical presence in the community through branches, community service projects, and other initiatives to increase visibility and convenience of service.
So as you can see, the Hispanic community is a great opportunity for credit unions as the community is growing, is underserved, and their economic power is strong. Do not let your credit union get left behind by other credit unions who effectively serve this increasingly lucrative market.