The law of averages presumes your credit union already serves Hispanic members. The sheer volume and growth of this decidedly “emerged” U.S. consumer market has likely brought many first- and second-generation Hispanics to your door. Yet simply having Hispanic members does not necessarily mean a credit union is serving this influential member segment well.
As strategic planning season approaches, smart credit union leaders will look more closely at how the largest, fastest-growing, youngest and most underserved population in the U.S. is being served by their cooperatives today. Many will discover the need for a more defined, strategic outreach and service strategy.
Five fact-finding questions can guide these examinations:
What does the make-up of our current Hispanic membership and Hispanic community look like?
Getting a handle on the current Hispanic membership gives credit union executives an excellent starting point. And this question is about more than numbers. Credit unions need to understand as much as possible about their Hispanic members, including language preference, acculturation, age and level of engagement with financial services.
A next step is for the credit union to look to the field of membership to gauge potential. What Hispanic segments are present in the field of membership? What is the acculturation levels and language preferences of those segments? What is the credit union’s market share based on how many Hispanic members it serves today, and how many Hispanic individuals are present in its field of membership?
What’s our cultural readiness to serve a new market?
Management in most credit unions is aware of the growing Hispanic population in their fields of membership. However, “Where do I start?” is a common question.
Half the battle is developing the right mindset within the credit union. The ultimate achievement is a collective state of mind in which the entire organization believes serving the Hispanic community is not only the right thing to do, but also a profitable, priority business strategy.
It’s important for your credit union to be realistic and honest about whether it is culturally ready to serve Hispanics. Some considerations include:
- Are you, as a director or member of management, in alignment with your peers on making your Hispanic outreach initiative a priority?
- Do you have doubts or concerns about serving a new market?
- Is staff concerned about alienating the traditional member base by focusing outreach efforts on the Hispanic market?
These are questions that need to be addressed upfront to determine if your credit union is rejecting or embracing this initiative.
What’s our operational readiness to serve a new market?
There are six specific building blocks to the achievement of a collective state of mind. They are:
- Understand the local Hispanic market
- Determine the level of cultural buy-in of the staff in your organization
- Establish the business case for serving Hispanics
- Assess your credit union’s level of preparation for reaching this demographic
- Develop a strategic plan for reaching Hispanics
- Adapt to the market instead of waiting for it to adapt to your credit union
What’s preventing us from developing a Hispanic growth strategytoday?
A lack of cultural or operational readiness may be what keeps Hispanic growth in the realm of “It would be nice” vs. “It is a critical strategy.” However, other things may be standing in the way.
In talking with credit unions all over the country, we have learned of an unfortunate – yet all too real – set of misconceptions about the Hispanic market. Included in this set are two particularly erroneous myths:
- All Hispanics are undocumented.
- Hispanics only want transaction-based products.
In fact, of the country’s more than 52 million Hispanics, most are native-born Americans, and nearly three in four are U.S. citizens. Of course, it’s important to acknowledge the 11 million undocumented immigrants living and working in the U.S. Of this group, about 9 million are Hispanic.
As for the idea Hispanics are not interested in deposit products, our research shows something completely different. Our clients’ Hispanic members are as likely or more likely to have checking accounts and loans than non-Hispanic members. As well, median Hispanic loan penetration has been historically higher among Hispanics as compared to non-Hispanics. Our research also indicates that product penetration is increasing at a faste*r rate among Hispanic members as compared to non-Hispanic members.
How can we involve the help of experts to guide us with development and implementation of a strategy?
One way credit unions have pursued this strategy is through the use of Coopera’s Hispanic Opportunity Navigator (HON). Designed to make strategic planning for Hispanic growth simple, the HON not only provides a benchmark to use in measurement; it supplies a roadmap to follow. And this is true regardless of where a credit union is on the Hispanic outreach continuum.
Coopera often refers to three stages in the quest to become a successful Hispanic-community credit union: Discovery, Emerging & Best Practice. Whether just beginning to explore the possibilities (Discovery) or nearing the end of an existing growth strategy (Best Practice), the HON gives credit unions a customized strategy for achieving their goals.
Membership segmentation is a critical component to successful strategic planning for any credit union. As the Hispanic marketplace continues to command the attention it deserves from marketers, community builders and product architects in every industry, be sure your credit union is considering this important audience, as well.
Contributing Author: Michelle Dosher is managing editor for CUNA’s market research and consumer education department.