Understanding the Hispanic Market

CUNA Mutual Group
December 10, 2004

“Hispanics desire a relationship, which requires the credit union to understand the culture as well as the language.”

The Hispanic market is underserved, and therefore offers tremendous potential. In targeting this market, financial service providers must understand the market and how to adapt marketing and operations to its needs. In the fall of 2003, CUNA Mutual Group completed research on the levels of service currently provided to Hispanics by credit unions and other financial service providers. The research focused on identifying market characteristics, needs, current programs, and future plans. This information can be used to design a strategy that will facilitate this market’s growth.

The Hispanic market grew over 50% during the 1990s and is expected to reach 42 million by 2007. Immigration is a large contributor to this growth. Research conducted by the Pew Hispanic Center indicates that 63% of Hispanics in the United States are first generation. However, there is a slow rate of naturalization among these immigrants.

Demographic Differences There are important demographic differences between Hispanics and the general U.S. population. Hispanics tend to be younger, with lower incomes and education levels. Hispanics tend to live in urban locations with larger families.

Cultural differences also exist. The Spanish language is one important part of their culture; however there are many other differences. Because of these demographic and cultural differences, Hispanics expect different types of interactions with their financial service providers than do non-Hispanic members. Hispanics desire a relationship, which requires the credit union to understand the culture as well as the language.

Overall, the percentages of Hispanics with financial products and services are lower than that of non-Hispanic whites. Hispanics indicate several needs related to finance. Eighty-eight percent of Hispanics indicate that they would like more financial institutions to offer products and services with them in mind. In addition, 82% wish that they had more information about saving and investing their money. However, specific product and service needs vary among different demographic groups.

Serving the Market Meticulous strategy development is needed to effectively reach this market. There is no “one-size-fits-all” strategy to serving the Hispanic market. Credit unions will need to identify and analyze their local target market, taking into account market size and the needs of different demographic groups.

In the research, credit unions varied in the levels of service they provide to Hispanic members. Five levels of service were identified: mainstream, transitional, newcomers, experienced, and bicultural. Tools that these credit unions use vary, but can include a bilingual staff, marketing-related services, Spanish-language operational forms, acceptance of alternative forms of identification, and customized lending or deposit products.

It is imperative for credit unions to have an in-depth understanding of this market’s needs. They must evaluate the market’s benefits and advantages and develop a comprehensive strategy for targeting this market. To develop and grow the Hispanic market, it is important to take it one step at a time and monitoring those results.

This executive summary is excerpted from a white paper produced by CUNA Mutual Group ( www.cunamutual.com) and is reprinted with permission.

Click here to view the complete white paper http://www.cunamutual.com/cmg/addedDimensions/freeFormDetail/0%2C1248%2C9138%2C00.html