Service or stereotypes: Can credit unions engage multicultural members?

[00:00] Victor Miguel Corro: If you were to take the 67 million Hispanics in the United States and make them a country, they will be the sixth largest economy in the world, and the one that’s growing really, really fast. So it’s a segment that cannot be overlooked.

[00:21] Narrator: Welcome to 22 Minutes in Lending, your go-to podcast for insights on all things lending, from lending practices, regulatory updates, how to enhance lending efforts, and more. In each episode, Vince Passione connects with industry leaders to discuss the latest trends and happenings around the lending industry. Let’s dive into the latest in lending.

[00:43] Vince Passione: Welcome everyone to 22 Minutes in Lending. I’m your host, Vince Passione, and I’m thrilled to have Victor Miguel Corro join us today. Victor’s career has been dedicated to advancing the credit union movement globally. He spent over a decade at the World Council of Credit Unions, where he played a crucial role in connecting America’s credit unions with their Latin American counterparts. Today, Victor serves as the CEO of Coopera Consulting, bringing his wealth of experience to drive innovation in the industry. Victor, it is a pleasure to have you with us today. Let’s get started.

[01:12] Victor Miguel Corro: Thank you. Thank you for having me.

[01:14] Vince Passione: So Victor, I’ve heard your background before. I think it’s very unique. I love when people have a connection to credit unions the way you do. Could you spend just a few minutes talking about your background, and your connection to credit unions, and your journey in the credit union industry?

[01:29] Victor Miguel Corro: It’s interesting because my parents did start a teacher’s credit union in rural Panama. I remember when I was a teenager, every other night, we had all these teachers from the schools that my parents worked. They came to our house and they were always talking about something. In the end, it was just about starting a credit union because they were feeling financial pain. They didn’t have the best banking relationship with the commercial bank or the state-owned banks. So they started their own credit union, and now I think it’s grown to be the fourth largest credit union in terms of assets in Panama. So my mom was member number one, my dad was member number two. After I came back to the United States and graduated, I needed a job. The most interesting thing is that, being in Wisconsin and around Madison, the World Council of Credit Unions at that point was looking for a Latin American specialist, a person that had bilingual skills and worked in Latin America. My degree was in economics and Latin American studies, so that’s how I started 20 years of working at the World Council of Credit Unions. So from my parents starting a credit union, starting to work at the World Council of Credit Unions, and then now as the CEO of Coopera Consulting, my professional life has been dedicated to this industry, to this movement, to this space.

{03:05] Vince Passione: Excellent. No, I appreciate you sharing that. Let’s jump in to a little bit of terminology. So Hispanic, Latino, Latinx, can you give me some of the distinctions, and how do you identify?

[03:17] Victor Miguel Corro: I would say those are very imperfect labels that are trying to basically describe a constituency that is very nuanced and complex into something that is digestible and understandable for people to market to, or to just basically classify a large group of people as certain things. So Latinx, Latino, Hispanic, like I said, imperfect labels. I would say I identify first as an American, but then a person who happens to be of Panamanian origin. So if you were to ask me, am I Latino, am I Latinx, or am I Hispanic? I will tell you, “You know what? I’m from Janesville, Wisconsin, but my parents are from Panama.” So that’s what it is. Usually identity, it’s very nuanced and complex when it comes to the Hispanic population, and that’s why there’s never a really short explanation of what it is.

[04:14] Vince Passione: So break it down for me. 67 million Hispanic, Latino individuals in the United States, 20% of the nation. Can you break it down further for me, and give me a sense, and our listeners, of how it breaks out?

[04:28] Victor Miguel Corro: If it’s 67 male and Hispanics in the United States, again, in terms of identity, we don’t see ourselves as a monolithic group. Largely, most of this 67 million, their background is, they come from Mexico. Their families came from Mexico. They could be first, second, third generation. They could be fully acculturated to the United States, they may not be yet. They may speak Spanish, they may speak English, and they may understand financial terminology, and have a worldview that differs in 21 ways because there’s 20 plus countries in Latin America. Each country very proud of their accent, their way to speak Spanish, their food, their history, their geography. So that’s why, when we come to the United States, yes, we may be coming from Latin America, but now we’re acculturated into a whole new country, but still hold a lot of things that tie us back to our countries of origin. At the same time, we have this dual American identity. Some days you could feel completely and very American, and some days you really long for your family and where you came from. So it’s always a very interesting lived experience.

[05:53] Vince Passione: Victor, I was listening to one of your podcasts and you had this quote, which I think kind of sums up your mission, so I’m going to share it with the listeners, “If you don’t intentionally, deliberately and proactively include, you’ll unintentionally exclude.” Okay, so this is all about inclusion. How do you get the credit union’s attention here? We talked earlier, when I started almost two decades ago serving credit unions, there were probably 15,000 credit unions. Today there are 4,750, I believe. So it’s an industry that’s shrinking. It’s about 147 million members, and growth has kind of slowed the past couple of years. This should be an easy message. There’s 67 million Americans out there that need credit unions who would resonate with your message of inclusion and your first premise, which is trust. You have to get [inaudible 00:06:47]. So how’s it going, and how do you direct people to do this?

[06:52] Victor Miguel Corro: Well, first of all, obviously we need to be very aware of the data and the seismic demographic shift that is occurring in the United States. In between 10 and 15 years, we’re going to become a minority-majority country, meaning This transcript was exported on that if we count all the Asians, Hispanics and African Americans, we will have a majority of people of color country. Credit unions were created with a mission, and the mission of financial inclusion and financial well-being. So do we include everyone? Yes, that’s our mission. Then we have to really have plans to include the most marginalized consumer, and the most marginalized consumer usually is a person that is a recent immigrant who doesn’t speak the language. Not saying that this is the only constituent that is the most marginalized, but it’s high in that priority for credit unions. So having that clarity of mission is very important so that the credit unions activate their cooperative business model and their mission of financial inclusion. So that’s being intentionally inclusive. If we have the data that tells us, yes, there’s 67 million Hispanics in the United States, and this is a very nuanced constituency, and we know that they’re largely unbanked, they don’t have the best relationship with banking, then us as credit unions really need to have a plan for them.

[08:30] Vince Passione: So as you go out and you talk, is this a message that people are leaning into, they’re leaning back from, it’s still early for them to understand it? Because if I think about an industry, especially now… I had Barry Kirby on from Union Credit, and he always talks about the need to get younger, and that by the end of the year, the average age of a credit union member will be 57 years old. So need to get young, need to grow. It seems like this is a message that people should be gravitating to. What are the obstacles that you’re seeing when you’re out and you’re speaking to groups of credit unions?

[09:09] Victor Miguel Corro: Largely is not knowing the data, not having mindfulness around the demographics of the country, of the state, of the county, or the local level. We always said, “We are people helping people,” but what we really need is a serious exercise in segmentation so that we understand the different segments and the different lived experiences that we have around our field of membership. Consumers want to be seen, heard, listened to, and act upon. To know that somebody may be second generation Hispanic, and their country of origin or their family is Bolivia, it’s very important because those folks will understand the world in a certain way, and they may not be in line with the traditional or legacy member of credit unions. So the more that we understand about the people around us, and the growing and youngest segments of our communities, the more relevant we will be into the future as credit unions.

[10:26] Vince Passione: I was looking at this Brookings study, and there’s some of your work that’s referenced it as well. One of the big issues is trust, and you talk about trust all the time. I saw a banking crisis recently, where we had a whole bunch of banks that disappeared. I remember listening to many of the leaders at the credit unions talk about trust, “What we have is trust.” So do you believe that… First, is that one of the big issues, distrust from this demographic of financial institutions? Then, do you think the credit unions have a leg up on trust when it comes to this demographic?

[11:05] Victor Miguel Corro: Yeah, trust is fundamental for retail financial services, and there’s usually a distrust in consumers when it comes to banking, especially if they have been “burned” before by not the best practices. So credit unions have actually that cooperative business model that resonates a lot, let’s say with the Hispanic constituency because their mindset, and this is our generalization… It’s less individualistic and more collectivistic. So we think, as Hispanics, more as to how our decisions are going to impact our family, our loved ones and friends, rather than individually first. So having a cooperative model resonates a lot with this constituency. But the other thing is  that, human nature, we would like to see ourselves reflected in the staff that a credit union has, especially if we’re most marginalized. When I came to this country, I didn’t know English. If I found somebody who could speak Spanish at a branch of a credit union, for me that was a win because then I could communicate, I could convey exactly what I meant without having a language barrier in between. So when a credit union, when a bank, when a financial institution shows that they understand of that mindset, that generates trust. If they see the credit union also interacting and being partners of community-based organizations that understand certain constituencies and advocate for certain constituencies, yes, then there’s trust there because you see a legitimate effort to help, and not so much to sell things to a consumer. So that’s an important thing to at least start generating trust.

[13:07] Vince Passione: Now, how much does technology play into this? In that same study, there was a whole discussion about engagement levels from the Hispanic community and other minority groups as well, where technology is being used and adoption of fintechs because there’s a trust that’s being created because of this technology. Now, some it’s product related. But just on the fintech discussion, do you think the fintechs are winning a larger share of this population versus traditional banks and credit unions?

[13:37] Victor Miguel Corro: At least at the beginning. One of the things that we need to understand is that the Hispanic consumer market in the United States is very young, and the medium age is about 28, 29, so these are digital-first consumers. So they would look and engage with a brand when that brand is easy to engage with, there’s no friction with them. Usually a mobile phone or a cell phone provides that frictionless experience and exposure to a brand. This is why fintechs are very successful at getting the eyes of these constituencies. However, what we notice, and I do a lot of focus group with young Hispanics, they don’t want only that transactional relationship. They actually want a transformational relationship. The credit unions had the key to have the transactions at the front end, but then as you bring them into the fold, and then you start advocating for that consumer to engage with more products and services that actually lead to financial well-being and a financially healthy consumer, then from the transactions, from having a checking account, from having a way to pass cash from one person to another to do payments, the credit union then starts understanding that consumer, and in the end understanding that the consumer really wants to build credit, to acquire assets, and to purchase a home ultimately, because in many minority communities that’s what is missing, building wealth to then pass it to the next generation. So the credit unions and fintechs would start with a transactional thing, with transactions, but then they will move on to the transformational relationship with that consumer.

[15:34] Vince Passione: So in your work with credit unions, do you talk specific about products, and are certain products important to have? Understanding it’s not a monolithic group, but if you think about products and services… In the same study, we talk about over 8% of Hispanics are unbanked or underbanked. Of those, when asked, 21% said the reason is they do not have the ability to meet that minimum requirement to open up that checking account. So is there a product suite that you start with that say, “Look, this is a must have?”

[16:11] Victor Miguel Corro: Yes, it really depends on who we are trying to serve. It is important for at least… When we talk about the Hispanic consumer, it’s important for that Hispanic consumer to understand that they’re not being pigeonholed as Spanish only speaking, as low income, and as a person that needs an ITIN number rather than a social security number to open an account. The person needs to know that organization has a wide variety of products that go from those transaction things to wealth management. Because we cannot pigeonhole Hispanics as just immigrant and poor, because that’s not true. More than 80% of the Hispanics are actually US citizens, and a large minority were actually born here. That’s something that we don’t understand in many places. But if you are going to focus on the most marginalized consumer, yes, you need to accept an ITIN number rather than a social security number, you need to accept a low balance savings or checking account, then you need to start with more basic products, just like a signature loan that would be paid in less than six months so that, as you advocate for the consumer to have good repayment practices, the creditor starts reporting this to the credit bureau so that the person starts building their credit and then really becoming a subject of credit in the United States. Now, that’s one thing. But then you also need to have the more sophisticated product for those Hispanics that may be high wealth, high income, or business owners. So then you don’t convey the image that, “Oh, stereotypically, I think that Hispanics are all Spanish-speaking, recent immigrants, and poor.” So that’s a very important thing to really convey with our products and services, and the way that we communicate with our communities.

[18:20] Margie Click: Hello. This is Margie Click, CEO and President of Agriculture Federal Credit Union. As a $360 million credit union, we’re always looking for ways to innovate and expand our financial solution offerings to attract new members. That’s why for nearly a decade we’ve been partnering with LendKey to attract and acquire new credit union members.

[18:46] Vince Passione: We had a couple of credit unions on. We had Tanya Sturgeon, she’s the CEO of Guadalupe Credit Union in Santa Fe, New Mexico. Great story about using ITIN lending. I believe she’s also a CDFI. So you did a study with Phylene. How do you position that with your clients as a growth engine?

[19:07] Victor Miguel Corro: Well, again, it starts with the analytics, with knowing the demographics. We are living in an area of the country that is seen… Let’s say the largest constituency when it comes to immigrants come from Venezuela at the moment. Then you find that population is growing within your field of membership.  Then the credit union needs to know that in order to start including these folks… They’re recent immigrants, may be asylum seekers, who knows what their immigration status may be. But in order for them to start plugging into American life, they need to open an account. Many times they may not have a social security number. Guess what? The ITIN, I-T-I-N, identification number given by the treasury, it’s a way that a credit union can use to open that account, coupled with a government issued ID, and it could be from another country. So the credit union needs to start there, and that is a clear signal to that most marginalized recent immigrant that, yes, you’re welcome here, and actually there’s a financial institution that will welcome you with open arms. When I look at credit unions, one of the best examples in the country that really have understood this, and they put that most marginalized recent immigrant segment as a growth engine because, guess what? Not that many banks or other financial institutions are preoccupied, or having a plan for them. So finding this underserved niche within the market will start generating trust. That trust will mean higher market share and a lot of word of mouth saying, “Yes, Guadalupe Credit Union or Credit Union is really into understanding us as recent immigrants to the United States.” So that will be the start of a plan and a growth engine for many credit unions.

[21:16] Vince Passione: You’ve been at this for a while, in the industry. How are we doing, and how do you think the next 10 years lay out when you think of the work that you’re doing at Coopera and with some of your other partners?

[21:29] Victor Miguel Corro: I think basically the sense of urgency that we need to have as an industry. We may be very distracted by shiny objects, and what we’re not seeing is how people are changing. That’s what the issue is. When you know that the country’s changing, the identities are very varied and diverse, that’s worth investing money in.

[22:01] Vince Passione: It was interesting, I almost fell into this theme and you took me away from it, but the idea that you have 67 million Hispanics in this country, and that the discussion is about things like, “Well, what about ITIN? What about CDFI? What about access to low balance checking accounts?” In your comment that, “No, no, no, you’re missing it.” Yeah, we certainly have some of that, where we have a portion of that population that’s been marginalized, or underbanked, or unbanked, but that’s not who this population is. These are Americans in this country, many second, third generation, who are now moving into their financial lives. They’re younger, they’re a digital group who now are asking… The Brookings research, the fact that cryptocurrency is of interest. It’s typically someone that’s building wealth, that has interest in cryptocurrency. So I feel like I almost fell into that trap with you. You kept pulling away from it, and now I understand why. You’re like, “Well, wait a minute, these folks aren’t all walking around trying to figure out how to open up a checking account for a full suite of services. They’re trying to build generational wealth. They are looking for a trusted advisor to help them do that.”

[23:26] Victor Miguel Corro: Yeah, I think it’s the narrative that we get from the media that basically pigeonholes everyone who’s Hispanic as recent immigrant. And if you were to ask the Hispanic constituents in the United States, immigration is not the first thing in their heads, it’s economics. They’re part of this country. It’s a mainstream market. 67 million people is a heck of a lot of people, and that is lost in the narrative as well. Then you get pigeonholed as, again, Spanish-speaking, poor, and othered. This is much a mainstream market that speaks two languages, and just happen to have a dual identity. The older you get in second, third, fourth generation, you’re completely assimilated, you don’t think of yourself as Hispanic anymore. You may think, “Oh, I’m multi-cultural or multi-racial,” but you identify mostly as American. But our country still doesn’t see us as fully 100% American. That’s something that you do have to contend with, and many brands by may not be aware of how you see or perceive, and then how you see yourself.

[24:43] Vince Passione: It was interesting. I kind of sensed that we’re going through it. It’s like, “Well, yeah, it’s interesting,” but it’s more about, how do you allow your credit union to understand the numbers, understand the demographics in their trading area, and then have their credit union reflect those demographics so that all these different segments in the country feel comfortable banking with you, because you want to see yourself. Look, I’m Italian American, my grandparents immigrated to this country, and they were educated, but unfortunately didn’t speak English, and that had a huge impact on their ability to get work in the country. But now I’m sitting here, and that’s not… I view myself as being American. I don’t view myself as being Italian American, to your comments, so interesting. I think that’s where it brings it back to the numbers. To your point earlier, you need to know the demographics in your trading area and how you’re really catering to it, especially when you go back to this, “Look, in less than 20 years, this is going to be a minority-majority country, and how are you going to make certain that you reflect what your trading area looks like if you’re trying to have those folks become your customer?

[26:00] Victor Miguel Corro: Right. Digital savvy is the constituency that grows their income the fastest, the most entrepreneurial. Last week, I was sharing with a group in Portland, Oregon, “If you were to take the 67 million Hispanics in the United States and make them a country, they will be the sixth largest economy in the world, and the one that’s growing really, really fast.” So it’s a segment that can not be overlooked. It’s not well-represented when it comes to politics, or office, or even in the structure of power for many factors, many reasons. But as we go forward, you’re going to see this market segment really, really rise to the occasion and be very visible.

[26:55] Vince Passione: Well, Victor, we’re pretty much up to our time. Thanks so much for joining us today and sharing your insights. As always, thank you to our listeners for tuning in. Don’t forget to subscribe so you can catch future episodes, and I’ll meet you back here at our next 22 Minutes in Lending.

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