Migrating To Page One
It seems like only yesterday that immigration problems were relegated to the back burner, but now they are burning hot, according to David Grace, senior manager for regulatory monitoring for the World Council of Credit Unions.
"This topic is sure at the forefront right now, it's very topical and some of it is 'edgy,' for sure, but it's also vital that we talk about it," Grace told a crowd of Future Forum attendees at a breakout titled "Discovering & Serving the Immigrant Population."
Explaining that WOCCU is "like CUNA on a global level," Grace laid the groundwork for its knowledge base of understanding immigrant populations and how to meet their financial needs through credit union membership. The statistics can be startling: 42.7 million Hispanics (14% of the U.S. population), 18 million foreign-born Hispanics (6.2% of the population) and 11.1 million undocumented persons (29% of all immigrants). They come from Africa, India, Latin America and Asia, said Grace, and like it or not, they are an important part of the overall American economy.
"Immigration is at the highest levels since the 1920s. Everyone agrees the current system of dealing with it is broken, but what exactly to do about it is all over the place," he said.
Grace noted that in order for the economy to grow, the population has to grow and the current level is between 1%-2%, while CU growth is at 1.1%. "So we're about even with population growth, but that's the lowest growth level for CUs in the last 25 years, and it's mostly at very large credit unions at that. The rest, or credit unions with assets under $500 million, are shrinking."
This presents an amazing opening for credit unions, he said, because of the following numbers: 47, 36 and 27.
The first, 47, is the average age of members of CUs, the second, 36, is the average age of the U.S. population as a whole, and the last, 27, is the average age of Hispanic immigrants.
Hispanics can be segmented into three categories: new immigrants, who speak Spanish, have minimal formal education and low income, generally, who use money transfers and check cashing services; children of immigrants, who are bilingual, proud of their heritage but culturally assimilated and want access to higher education; and those who speak English and are indistinguishable from other members, who use credit cards, make auto and mortgage loans, etc.
To serve all, credit unions must first understand their local immigrant population by going to organizations, churches/mosques and employers to find out where they are on the "assimilation spectrum."
That will show the way to meeting their immediate needs, which usually involve basic loans (to establish a credit history) and financial education (many countries lack the U.S. credit structure or have no credit bureaus and offer no banking privileges for the poor).
There is ample room for improvement, offered Grace, as some 38% of Hispanics still do not know the value of having a bank account, 25% are unaware that they can open one with a Social Security Number and driver's license and finally, most just don't feel welcomed by financial institutions.
The higher cost of payday lenders, remittance services and money orders makes credit union services to these people very attractive, so removing obstacles to joining should be a priority, said Grace.
The rewards will be reaped in future years, he said, as Hispanics will account for half of retail banking growth in the next decade.