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Study Finds Hispanics have Strong Desire to Reduce Debt and Save for Financial Goals; OneSource CU CEO Says it's Great Opportunity for CUs
Thursday, July 17, 2014 6:55 AM

According to the most recent U.S. Census, Hispanics are the fastest growing population segment in the country, expected to grow 167 percent from 2010 to 2050. By comparison, the total population is only projected to grow 42 percent during the same timeframe. Recognizing how important this demographic is to the future growth of credit unions, the Cornerstone Credit Union League has developed a Hispanic outreach program (Juntos Avanzamos) to help credit unions be more successful in opening their doors to the Hispanic population. 

Juntos Avanzamos means “Together We Advance,” and Cornerstone awards this designation to credit unions that have successfully completed a rigorous application process that confirms they have the infrastructure to meet the financial needs of Hispanic families. There are currently 28 Juntos Avanzamos credit unions.

“As the Hispanic population continues to grow, so does our [credit unions] opportunity to expand our membership and grow our loan portfolios,” notes Bob Peterson, chair of Cornerstone’s International Relationship Committee and CEO of OneSource FCU in El Paso, Texas. OneSource FCU is also one of the 28 Juntos Avanzamos credit unions.

Peterson notes that there have been numerous studies examining the financial habits of Hispanics. An FDIC study, for example, finds that 48.7 percent of Hispanic households are either unbanked or underbanked. The national Council of la Raza puts the percentage at 20 percent. And a just released “Hispanic American Financial Experience” report by Prudential finds that Hispanic Americans have a higher financial confidence (46 out of 100) than the general population (43). That same study also finds that Hispanic Americans have a strong desire to reduce debt, purchase a home and save for financial goals.

“There is a great financial opportunity for credit unions in the Hispanic market,” notes Peterson. “However, if we want to earn their business, we have to be at the forefront of educating them on how we can help them meet their financial goals.”

As with any other demographic, Hispanics have a need and a demand for financial services. To be effective in serving Hispanics, Peterson says credit unions will need to remove any barriers to service. For example, having a bilingual and bicultural staff is essential. Credit unions should also be present in the community; forge relationships with key leaders in the Hispanic community; and provide much-needed financial education, among other things.

Credit unions interested in learning more about the Juntos Avanzamos program will find information on Cornerstone’s website, at www.cornerstoneleague.coop/hispanic_outreach.html.

Additionally, in the summer issue of Perspectives, Sean Cahill, CEO of Southwest 66 CU, shares insight on how his credit union has leveraged the Juntos Avanzamos designation to grow its Hispanic outreach efforts.

“One of the best things our team did was to work with Cornerstone on obtaining our Juntos Avanzamos designation. Just the application process by itself was a great resource to ensure we were doing the right thing to serve our members,” he tells Perspectives readers. “It made us look hard at how we were doing business, and it greatly improved our delivery to the market. Plus, having a flag out front announcing “Together We Advance” is an incredible statement.”

Read more of Cahill’s “From Marginalized to Mainstream,” article.

Following are other highlights from Prudential’s survey:

  • Unlike other groups, Hispanics' Financial Confidence Index scores are highly consistent across demographics.
  • Hispanics identify more as savers than investors, with 37 percent indicating they are more of a "saver" than an "investor." However, nearly as many (36 percent) say they are "neither a saver nor an investor."
  • Survey findings reflect a cultural aversion to debt, as evidenced by 62 percent asserting that there is no such thing as "good debt" and 49 percent indicating a preference to pay cash for an item or not buy it all.
  • Household expenses, health care costs, savings and debt level—all near-term concerns—are ranked as higher concerns than retirement.
  • Family finances are often multigenerational and global, as evidenced by one in six supporting parents and 42 percent of non-U.S. born sending money to relatives in their home country.
  • The anticipated retirement age indicated by non-retired Hispanics is 66, which is three years later than the general population.
  • More than half of the Hispanics surveyed—regardless of income or country of birth—indicated a "poor" or "very poor" understanding of U.S. workplace-based retirement plans and Social Security.