For many credit unions, reaching out to the LGBT community could present a significant growth opportunity, according to a new study by the Filene Research Institute.
The statistics in “Understanding the LGBT Opportunity in Financial Services” tell a compelling story:
- The lesbian, gay, bisexual and transgender population in the United States is estimated at between 8.5 to 10 million individuals.
- Same-sex households are less likely than heterosexual households to own property and hold mortgages.
- Credit discrimination is a major pain point for the LGBT population.
- A majority of the LGBT population in one survey have strong or moderate concerns about being denied a home mortgage because of their sexual orientation, not their credit scores.
“Today, even amid marriage equality, there are still 29 states where it is still completely legal to take sexual orientation into consideration when extending credit,” said Andrew Downin, Filene’s innovation director, who is gay. “For Americans who don’t face this on a daily basis, I know that’s a shock. Even in states where such discrimination is prohibited, there may still be the perception that inclusion and acceptance just isn’t on credit unions’ radar.”
One of the things contributing to this perception is the fact that some key documentation and paperwork at credit unions (and most financial institutions)—particularly for mortgages—are skewed toward heterosexual married couples.
Equality Washington, an LGBT advocacy group that previously explored chartering a new credit union specifically to serve the LGBT population, teamed up with Filene
“Loan applications can be a real stumbling block,” said Filene Chief Knowledge Officer George Hofheimer. “When they went to buy a home in Seattle, they couldn’t fill out the regular application and actually to fill out different paperwork. It’s more often subtle barriers like this, rather than active discrimination, but even these subtle barriers can create real problems.”
For credit unions trying to make inroads into this demographic, the first step is to assess their own marketplaces to determine the potential size and scope of the LGBT population and then determine whether the CU has the ability—and the appetite—to serve that community, Hofheimer said.
“A credit union also needs to assess whether outreach to this segment meets the needs of it full membership,” he said, noting that a faith-based institution that serves a religion that doesn’t approve of same-sex marriage, for example, might see more cons than pros to trying to reach out to the LGBT market.
Downin, who worked for three CUs before joining Filene put it another way. “A credit union that is focused on serving the needs of telephone workers isn’t going to create products for teachers,” he said. “Each credit unions has its own unique market and its own unique marketing strategy.”
Still, this sort of outreach is a natural fit with the credit union philosophy, both Downin and Hofheimer said. “History’s a good teacher, and credit unions have always been about providing access to credit for all people. This is an area where credit unions can lead, and, in fact, credit unions are leading on this topic,” Hofheimer offered.
Downin agreed. “I’ve been lucky. I worked for three open, member-centric credit unions in California,” he said. “As one of my former CEOs put it, ‘our job is to serve the people who come to us, not judge them.’ The philosophy and spirit of credit unions has been all about serving everybody.”
And there’s no need to reinvent the wheel, according to Hofheimer, noting that many of the same tactics that credit unions have used to reach out to other segments—immigrants, Hispanics, youth, underserved and more—will work for this group, as well.
“Working with local groups that serve that population who can identify the market—where they shop, where they do business, what their needs are, how best to reach out to them—this is something credit unions have done with other groups,” he said.
Another key element to these efforts, Downin suggested is sensitivity training. “Having worked in credit unions for 20 years, I’ve not experience d this myself, but I’ve heard stories from my friends,” he said. “They’re wondering if a teller or a loan officer is going to give them a funny look because they’re a same-sex couple.”
Though the study emphasized things less visible to the public such as reviewing loan documents and other paperwork with an eye out for anything that might skew toward heterosexuals, Downin said credit unions should also look at the language and images they use in their marketing and keep an eye out for opportunities to target market existing products, such as wedding loans, to the LGBT market.
“Even before the Supreme Court’s ruling on same-sex marriage, gay people were buying homes, buying cars, and needed help with estate planning and retirement planning,” Downin said. “The real difference is that with the opportunity to get married, that is encouraging gay people to come out of the shadows.”
And in exploring this potential opportunity, credit unions might come across some surprises along the way.
“A credit union in Olympia, Wash., that has been working with Equality Washington discovered that it had a transgendered person its staff,” Hofheimer related. “Going through this process can be a really powerful experience.”
In a letter from Olympia CU CEO Tammy Doles-Roberts that is cited in the Filene report said working with Equality Washington has been an eye-opening experience.
“Olympia Credit Union has served a very diverse group of membership for years . . . based on the root mission of the credit union movement of ‘people helping people.’ There are no exceptions or exclusions to the word ‘people.’ All human lives are valuable and all people need respect and financial resources. This is how we operate,” Doles-Roberts wrote, adding how shocked she was to learn that’s not how everyone does business, and just as importantly, that’s not necessarily what members of the LGBT community expected.
“We started reaching out to our own local community for staff sensitivity training and found that we currently had a vast number of membership already a part of the LGBTQ community. In fact the facilitator of our training was also a current member. This sensitivity training was truly eye opening and we plan to do follow-up later in the year. We’ve also put a LGBTQ safe zone sticker on our doors. We realized that we needed to let the LGBTQ community know we are here for them and we want to make every effort to provide financial services in an individually customized way that makes them feel comfortable.”
