October 15, 2024
“Credit unions were created with a mission of financial inclusion and well-being. Do we include everyone? Yes. That’s our mission.” ~ Victor Miguel Corro, CEO of Coopera Consulting.
The Hispanic community in the United States is not only large but rapidly growing, representing a significant portion of the population that remains underserved by traditional financial institutions. As of 2023, Hispanics accounted for nearly 20% of the U.S. population, a figure that is expected to increase in the coming decades. This demographic shift presents both challenges and opportunities for credit unions, which are uniquely positioned to serve this community by leveraging their cooperative model and community-focused mission. To discuss this important topic, Victor Miguel Corro sat down with Vince Passione during a recent episode of LendKey’s 22 Minutes in Lending podcast.
Understanding the Demographic Shift
Over the past decade, the Latino share of the U.S. population has grown from 16% to nearly 20%, making Hispanics the second-largest ethnic group in the country. This growth is not just in numbers but also in economic impact. According to UnidosUS, Hispanics contribute over a quarter of a trillion dollars in taxes each year and are more likely to start businesses than the general population
Despite this economic influence, many Hispanics remain unbanked or underbanked. The Federal Deposit Insurance Corporation (FDIC) reports that about 12% of Hispanic households were unbanked in 2021, compared to just 2.5% of white households. This disparity demonstrates the need for financial institutions, particularly credit unions, to address the barriers that prevent many Hispanics from accessing mainstream financial services.
Building Trust Through Inclusion
Trust is a cornerstone of any financial relationship, but it is particularly crucial in the Hispanic community, where past experiences with predatory lenders or unfamiliarity with the U.S. financial system have led to skepticism. Credit unions, with their member-first, community-focused philosophy, are ideally suited to build this trust. Corro emphasized the importance of this approach, stating, “Credit unions must recognize these changes and develop plans that reflect the needs of a multicultural, digital-first membership base.”
One of the most effective ways credit unions can build trust is by addressing those needs and removing barriers to access. This includes offering services in Spanish, accepting alternative forms of identification such as Individual Taxpayer Identification Numbers (ITINs), and providing financial education tailored to the Hispanic community’s needs.
Programs like Juntos Avanzamos, which means “Together We Advance,” exemplify this approach by designating credit unions that are committed to serving Latino communities. This initiative, which has expanded to over 115 credit unions across 27 states, is a testament to the impact that focused, inclusive efforts can have on communities.
The Role of Technology in Financial Inclusion
Technology plays a critical role in bridging the gap between credit unions and the Hispanic community, particularly among younger generations who are digital natives. The UnidosUS survey found that younger Hispanics expect seamless, mobile-first interactions with financial institutions. This expectation provides a clear directive for credit unions: invest in technology that facilitates easy, frictionless access to financial services.
Credit unions that have embraced this challenge are already seeing the benefits. For example, Illiana Financial Credit Union in Illinois recognized the growing Hispanic population in its service area and adapted its services accordingly. By accepting ITINs and investing in bilingual staff and digital tools, Illiana Financial became the first credit union in the state to receive the Juntos Avanzamos designation.
A Call to Action
The future of the credit union industry depends on its ability to adapt to demographic changes and meet the needs of a diverse membership base.
As the U.S. moves closer to becoming a minority-majority country, the importance of financial inclusion cannot be overstated. Credit unions that embrace this challenge by offering inclusive, technology-driven services and building trust within the Hispanic community will not only fulfill their mission of financial inclusion but also secure their long-term growth and relevance.
This is not just about social responsibility; it’s about recognizing and seizing a tremendous business opportunity. “The Hispanic community is young, entrepreneurial, and increasingly influential. By serving this community effectively, credit unions can ensure that they remain vital players in the financial landscape of the future”, said Corro.
The time to act on this mission is now. By recognizing the potential of the Hispanic community and taking deliberate steps to include them, credit unions can initiate a new era of growth and impact for the communities they serve.