As our communities become more diverse and connected to global commerce, credit unions will need to ensure they leverage their language skills to remain competitive. Languages are not a “nice-to-have” skill, but an absolute necessity in order to succeed in diverse markets and reduce risks associated with language miscommunication. Languages will be among the most important skills for many credit unions to develop in our changing economy.
While the United States has historically focused on just speaking English, multilingualism is growing rapidly. From 1980 through 2018, the percentage of bilingual Americans nearly doubled, from about 10.68% to about 20.55%. One factor that could explain this is the fact that the United States is generally becoming more diverse. For example, since 2000 the population of more than 109 American counties have become majority non-white. However, another potential explanation is the realization that bilingualism, even if English is one’s native language, brings enormous benefits to an ever increasingly globalized economy. The New American Economy think tank produced a study showing that demand for bilingual workers has more than doubled in five years, including for both low and high skill positions. Studies in Europe have illustrated the macro-economic impacts of speaking foreign languages. Switzerland estimates that 10% of its GDP is generated from its multilingual skills, while the UK estimates that lack of multilingual skills costs it over 3.5% of its GDP.
Credit unions are the perfect examples of institutions that need to develop language skills. Credit unions offer complex products and services to consumers in order to help them achieve their financial goals. Credit unions are focused on serving their communities and members, not shareholders. As our communities become more linguistically diverse, credit unions need to be able to effectively communicate their value in the languages spoken by their members. The large banking institutions understand the value of languages, as the New American Economy report showed that more than a third of Bank of America’s job postings online required bilingual skills.
There are enormous benefits for credit unions to reach into multilingual markets. I grew up in a majority Latino community and both of my parents are Latin American immigrants whose first language is Spanish. Firms that could not effectively communicate their value or serve their customers in Spanish did not do well in my community. Minority communities are growing significantly in spending power. The American Hispanic community has a spending power of over $1.4 Trillion USD, the African American community with over $1.2 Trillion USD, and the Asian American community at over $891 Billion USD.
The Immigrant communities in general are underserved by financial institutions. The Federal Deposit Insurance Corporation reports in 2017 that Latino, African American, and immigrant communities have higher percentages of members being unbanked or underbanked than the overall American population. As the spending power of these communities grow, these markets will only become more lucrative for credit unions.
Ineffective language skills are a major risk to firms and credit unions. The United States Committee on Economic Development estimates language and cultural misunderstandings cost American businesses over $2 billion dollars per year. Due to the complex nature of financial products and services and the potential detriment they can cause if mismanaged, financial institutions have been held accountable for not providing adequate language services to those who don’t speak English. Wells Fargo was accused of not providing Spanish speaking loan officers and taking advantage of Spanish speaking borrowers by steering them to more expensive and higher risk loans.
So how do credit unions effectively leverage their language skills to achieve the benefits I mentioned above? There are numerous ways to do so, so let’s go over some briefly. While credit unions can contract for translating services, they are often expensive options that may not provide the flexibility credit unions need. Instead, I suggest credit unions hire multilingual staff to serve their customers who don’t speak English. How do you know your staff is fluent enough for these important and complex products and services? I recommend ensuring your staff obtain language proficiency credentials. For example, Language Testing International offers language certifications based on criteria developed by The American Council on the Teaching of Foreign Languages that is widely recognized and respected. For more information on Language Testing International, see this link.
Leveraging language skills will benefit credit unions by being better able to serve their customers, grow into multilingual markets, and reduce their language communication risks. Credit unions should not ignore the importance of language skills if they don’t want to be left behind by their competition.