Programs, Banks Working to Bring Hispanics into Financial System

By Burton Bollag

Hispanics have a growing presence in all facets of American life. But they are still rare in bank lobbies. It is a situation that various leaders are trying to change.

U.S. Treasurer Anna Escobedo Cabral is among them. Cabral, whose grandparents immigrated from Mexico, works under the secretary of the Treasury, looking after the production of coins and currency and educating the public on money matters. She said immigrants from Latin America, like newcomers from other regions, are less likely than the rest of the population to have bank accounts, pay into retirement funds or get bank loans to purchase a house.

Typically, this is due to a lack of familiarity with banking services, language problems and a lack of trust. "A lot of Latinos come from countries where financial institutions are not necessarily sound," Cabral told America.gov.

Her office has stepped up efforts to spread financial literacy. The challenge is finding "more interesting and compelling ways" to educate, she said. Recently, the treasurer's office began working with the biggest producer of Spanish-language television soap operas in the United States, the Telemundo Network, to develop ways to insert information about personal banking alongside the themes of love, riches and adultery that are commonly found in soap opera plots.

In September 2008, the Treasury Department, in partnership with the Advertising Council, launched a bilingual advertising campaign to urge 18- to 24-year-olds to take control of their credit and avoid falling into debt. The campaign involves television, radio and Web advertising under the slogan "Don't let your credit put you in a bad place."

One financial transaction widely used by Hispanics is sending money to relatives in their home countries. But up to about five years ago, Western Union was the only company to provide the service, and at relatively high fees, Cabral said. The Treasury Department and several other government agencies and community organizations got together with a number of U.S. and Mexican banks and the Mexican Consulate to address the issue. (Mexico is the largest source country of Hispanic immigrants in the United States.)

Together, they created new, cheaper methods to send money. Some banks now offer the service. The average cost of a transfer has fallen from $25-$50 with Western Union a few years ago to $10-$15 today, Cabral said.

New technology has brought down costs even further. Some banks allow a person working in the United States to put money into a special account that can be accessed by a relative in Mexico using a debit card in an ATM.

Another result of the collaboration was the decision by many U.S. banks to allow Mexican citizens living in the United States who lack a U.S. Social Security number or U.S. driver's license to open a bank account using a Matricula Consular. That is an identity card issued by Mexican Consulates.

A collaboration started in 2003 in the Midwest under the leadership of the Federal Deposit Insurance Corporation reported 50,000 new bank accounts opened with Matricula Consular cards in the first year.

Such efforts are widely supported because they are seen as providing broad benefits. Banks gain more clients, and immigrants can stop paying high fees to check-cashing businesses. There is also a public safety issue: Criminals sometimes target people leaving check-cashing agencies with cash in their pockets. That is why in Austin, Texas, and several other cities, local police departments have been involved in projects to get immigrants to open bank accounts.

Opening a bank account leads customers to use other banking services, like loans to purchase homes. "Home ownership stabilizes a community," said James Ballentine Sr., an American Bankers Association vice president. "It benefits everyone."

Home ownership grew from 42 percent of Hispanic households in 1995 to 50 percent in 2006. That is still well below the 76 percent of white households that owned their homes in 2006.

Banks are learning, Ballentine said, that "unbanked" Hispanics represent a huge untapped market. They are also learning that, to attract more of them, banks must do more to "create a comfort level" for Hispanic customers, he said. They are hiring bilingual officers, using bilingual signs and creating larger lobbies and even play areas for children. "Latinos often bring their families" when they visit a bank, he said.

Some banks have gone further. First National Bank of Omaha, the country's largest privately owned bank, opened its Centro Latino de Educacion Financiera in 2005 on the city's south side, with its fast-growing Hispanic population.

Nearly 5,000 people so far have participated in Centro Latino's free, bilingual classes on financial literacy and microbusiness skills, according to Deborah Keating, vice president of the bank.

Centro Latino has processed 290 home loan applications from low- and middle-income borrowers. Some applications are turned down. "We don't just say 'No,'" Keating said. "We sit down with our clients and talk about how they can improve their credit rating so they can get a loan in the future."

For information on the Treasury Department campaign to help young people avoid debt, see the campaign's press release ( http://www.prnewswire.com/mnr/adcouncil/34658/ ).

Source: U.S. Department of State

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