Financial institutions are a fantastic business model to learn from when considering the ever-changing market conditions. Their traditional target markets are stable, but the needs of an emerging market, the Latino market, are grossly underserved. It is certainly not for lack of money. Many Latinos have zero debt and healthy savings habits. The question arises, are financial institutions doing enough to serve this population? Are they adapting to the needs of Latinos? The answer is complicated.
There are two types of Latinos in the United States. One is the immigrant who is looking for a better life and wants the American dream, whether they have come through the proper channels or not is irrelevant. The second is the Latinos who are born here. These are two very different groups of people with different needs and goals. Most immigrants bring their culture, traditions, and customs with them to the United States. Those born here develop a mixed culture that is both Latino and American.
Financial institutions are taking notice and taking steps to accommodate this economically influential population. The main reason is that there is a lot of investment in education and confidence building. An untold detail is that in Latin countries, people do not trust banks and financial institutions due to corruption. Everything is paid for in cash and there are no debts or traditional credit scores. This means that the Latino community has cash, probably stashed under their mattress or in a shoebox. This is very dangerous considering that a house fire could burn through a lifetime’s savings. Another scenario is that they could become a target for theft. This is a foreign concept to Americans. What is happening is a huge learning curve, educating them on the process of building credit, saving their money at a financial institution, getting loans (mortgage, car, etc.), and most importantly, having confidence in financial institutions.
The younger generations born here learn from their parents and the environment. There is still a disconnect from the importance of financial products, building credit and how that process works. Many of these young people are just translating for their parents, explaining financial products, and becoming middlemen to conduct business. You will notice an increase in bilingual support at many financial institutions for this reason. There is still a lot of work to be done in this regard, and this process will take time.
However, more and more financial institutions are offering specific products for Latinos. Information is available in Spanish and more financial institutions are hiring bilingual and multilingual speakers. It will be interesting to see how we as a country adjust to this important demographic. It is truly an untapped market that plays an important role in our economy for growth and stability.
