Boost your credit union’s competitive advantage by engaging with multicultural audiences

According to the United States Census Bureau, the estimated year when the U.S. will become a minority-majority country is 2045. This means that, by 2045, there will be no racial or ethnic group that makes up a majority of the population. Instead, no single group will make up more than 50% of the total population, with non-Hispanic whites becoming one of several minority groups. However, it’s worth noting that the exact year may be subject to change, though it is now an irreversible trend.

There’s never been a better time for credit unions to start (or grow) multicultural communities’ engagement as a differentiation strategy. Lending deeper to these market segments is one key way to do just that. Financial institutions that don’t consider efforts to expand multicultural business strategies will find it increasingly difficult to grow their customer base, deposits and loan balances in years to come.

As you begin your 2024 strategic planning discussions, consider how your credit union could make serving the Hispanic market and other multicultural markets a differentiation strategy. Below are four ways to start.

1. Understand your current membership and market using segmentation and analytics.

The first step in reaching underserved segments in your community with dignified financial services is understanding who they are and what they need. Segment your existing membership and market to determine how many are Hispanic or Asians, for example, and identify their language preferences. Use this segmentation to set a baseline for your Hispanic or Asian membership growth strategy. Develop new segment-specific marketing and product strategies for each specific market segment and continue to measure progress by monitoring membership growth.

2. Determine the product gaps that exist and identify where you can deepen relationships.

After you understand your current multicultural membership and market, you will want to identify opportunities to improve the member experience, including your lending program.

For example, if you notice Hispanics are not obtaining mortgages at the same rate as non-Hispanics, look at ways to bridge the gaps and address the root causes. For example, consider helping boost loan acceptance rates by providing more first-time homebuyer education or encouraging more collaboration with culturally relevant providers across the homebuying experience. Also, consider how you might adapt personal loans to meet the needs of consumers, such as providing loans to help pay for immigration expenses or emergencies with family members living in Latin America.

3. Explore alternative credit scoring models.

Many credit products accessible to underserved consumers feature one-size-fits-all rates and fees, which means they aren’t priced according to risk. Just because a consumer is un-scoreable by most traditional credit scoring models doesn’t mean he or she won’t be able to pay back a loan or does not have a payment history. Several alternative models available today can help a lender better evaluate a consumer’s ability to repay. Alternative sources of consumer data, such as utility records, cell phone payments, medical payments, insurance payments, remittance receipts, direct deposit histories and more, can be used to build better risk models.

Armed with this information – and with the proper programs in place to ensure compliance with regulatory requirements and privacy laws – credit unions can continue making responsible lending decisions and grow their portfolio while better serving the underserved.

4. Revamp, rethink or start your current communication with multicultural audiences.

Engaging with multicultural audiences requires an approach that is culturally sensitive, respectful and inclusive. Here are some good practices to consider when developing a communication strategy for multicultural audiences:

• Understand the cultural nuances: Before developing a communication strategy, it is essential to understand the cultural nuances of the target audience. This includes their values, beliefs, customs and traditions. This knowledge can help you tailor your messages and avoid any communication missteps.
• Use inclusive language: Use language that is inclusive and avoids stereotypes or assumptions. For example, avoid using language that assumes everyone celebrates the same holidays or speaks the same language.
• Use visuals and graphics: Visuals and graphics can help convey your message in a way that transcends language barriers. Use images that are culturally relevant and inclusive.
• Use multiple channels: Use multiple channels to reach your target audience, including social media, email, text messaging and traditional media. This approach can help you reach a broader audience and tailor your messages to each channel.

Multicultural audiences represent a significant and growing consumer base. In the United States, multicultural audiences currently make up 40% of the population, and this number is expected to increase in the coming years. Brands that can effectively engage with these audiences have a competitive advantage in the marketplace. Engaging with multicultural audiences is not only good for business, but it is also the right thing to do. Brands that demonstrate a commitment to diversity, equity and inclusion can build a positive reputation and improve their social impact. It is a matter of relevance.