Your inclusion strategy should incorporate youth outreach
If inclusion was the most discussed topic in corporate settings in 2022, 2023 needs to be the year that organizations take appropriate steps to implement and execute those inclusion plans and strategies. Being inclusive as an organization can no longer be a future promise, it is the present key to survival. As of last year, 13 percent of the U.S. spoke Spanish in the home and the U.S now has the 2nd largest population of Spanish speakers in the world. By 2050, it is estimated that one in three people in the U.S. will speak Spanish. If you have not implemented Spanish language programming, the time is now. But (I know you should not start a sentence with “but”, that’s how important this is) translation of your existing messaging and materials is not enough. In fact, poorly done, rushed or un-researched outreach may be counterproductive. True inclusion requires knowing your demographic and building community trust. Neither of which is accomplished with Google Translate.
Three out of ten Hispanic Americans are unbanked or underbanked. For financial institutions, this poses an incredible opportunity. The credit unions that will be the most successful in reaching these untethered customers will be the ones that can troubleshoot the “why” behind 21% of a population lacking comfort with traditional banking. While an individual’s motives for staying away from banks may vary, the main reasons include: (1) language barriers, (2) distrust of banking institutions (especially for those who came from countries with corrupt or unstable governments), (3) lack of access to brick and mortar locations as branches continue to close and consolidate, and (4) misconceptions that minimum banking balances are too high and will therefore result in fees.
With the exception of opening additional branches, these concerns can be overcome with culturally appropriate community engagement, education and marketing. The failure to appropriately engage has empowered predatory options to dominate for too long. Hispanic homeownership continues to rise, accounting for more than half of U.S. homeownership growth since 2010. However, new survey results from The Pew Charitable Trusts show that Hispanic home borrowers are more likely than other racial and ethnic groups to use risky and alternative financing. In fact, more than 1/3 of Hispanic home borrowers reported using these types of financing compared to only 19% of white home buyers. These alternative financing solutions are typically more costly with higher rates, are subject to fewer consumer protections than traditional mortgages, and do not always result in free and clear ownership of the home.
Why are Latinos turning to these riskier solutions? The best market research is to walk into a payday loan center. The signage, the window clings, and the first face you will see make it very clear that they cater to Spanish speakers. According to a study conducted by the University of Houston, researchers reported that Latinos comprise more than 30% of the pictures in payday loan marketing. Alternatively, almost 75% of mainstream banks did not feature even a single picture of a Latino individual. This discrepancy in representation may not be the only factor in the continuing racial gap but it surely contributes to the perception that traditional banking does not cater to or support people of color.
In addition to representation and language initiatives, these alternative and typically predatory solutions create specific and targeted marketing campaigns towards Hispanics. Examples and advertising speak directly to the issues and concerns of the community. These materials were not simply translated into Spanish, they were created in Spanish, highlighting the problems and concerns of the Hispanic community. Is it any wonder that these predatory efforts gain more trust and traction than well-intentioned but insufficient efforts of translating existing materials originally geared towards a completely different demographic?
I spent almost two decades as a corporate attorney. When I volunteered legal services at pro-bono clinics, the overwhelming problem I helped people resolve, especially my Spanish speaking clients, was re-negotiating high-interest rate debts. A person sees an ad to finance the purchase of a vacuum, computer, lawnmower, appliance, etc. The price is in line with the market rates or lower. No money up front, no payments for 3 months. Mind you, all these terms are bolded. What is not bolded is up to 400% interest rate that compounds, the exorbitant late fees, the fees on fees on fees. Too many times, I was helping someone who had already paid $600 on a $300 computer that had stopped working months prior and still owed another $600. Most of the time, I was able to negotiate these rates down and minimize the final payment, but the damage had already been done.
My business partner, Annie, also an attorney, similarly experienced first-hand the devastation caused by lack of financial education. These experiences were a major impetus in us starting an early childhood youth financial education company to stop the poverty cycle. As a Latina, it was clear that we could not truly effectuate wide-spread change unless we also focused our time, money and resources in engaging the Hispanic community, starting with its youth.
How can credit unions engage and educate the Hispanic community to help people find the better solutions that credit unions already offer? Hiring bilingual tellers and other staff, offering appropriately translated Spanish-language versions of websites, providing targeted marketing materials in Spanish and English, and connecting with local Hispanic business owners and groups are a great start. However, to truly find engagement, there must be a study of your community’s demographic. An emerging trend we are seeing nationwide centers around age cohorts. According to a Pew Research Center analysis of Census Bureau data, the most common age for white Americans is 58. The most common age for Hispanic Americans is 11. Luckily pay-day and title loan solutions have less of an incentive to target their marketing to people without a W-2 or a car.
For too long financial institutions have measured success by immediate ROI, thus ignoring long term potential. Your youth accounts and programming may be underutilized strategies in reaching potential Hispanic members who make up the overwhelming percentage of Latinos in the U.S. Connecting with the younger generation provides an amazing opportunity to educate while habits are still being formed and before these kids are bombarded with marketing from predatory lending alternatives.
Do your inclusion strategies include outreach to partner schools? Are you sponsoring youth programs and sports teams? Are you providing financial education to kids? Is that education in a form that can be shared with parents to help educate the whole family?
Inclusion refers to “the act or practice of including and accommodating people who have historically been excluded (because of their race, gender, sexuality, or ability).” Predatory agencies have already proven that targeted and personalized marketing to a community is effective. I believe that investing in programming geared towards Hispanic youth will prove dividends as a way of educating a huge population before mistakes are made and in building trust through the entire community.