Banks are trying, but many American minorities remain "unbanked," according to Synovate's 2008 U.S. diversity markets report. Aegis Group's market research arm found progress has been made, but not enough to bring about parity. "While the percentage of U.S. Hispanics with any type of bank account is up seven percent, from 70 percent in 2004 to 77 percent in 2008, this is quite low when compared to the general market and African-American consumer, both of which are at least 90 percent," according to the Synovate findings.

Even more sobering are the low levels of ownership of other financial services for both groups. Only 54 percent of African-Americans and 32 percent of Hispanics have IRAs or 401k plans, compared with 72 percent of general market users, the survey shows. Just 33 percent of African-Americans and 18 percent of Hispanics own either individuals stocks or bonds, or shares in mutual funds versus 60 percent of general market consumers. Certificates of deposits attract 25 percent of African-Americans, 24 percent of Hispanics, and 36 percent of all customers.

Some of these discrepancies may be difficult to remedy. "A substantial number of multicultural consumers don't have jobs with retirement plans," said Denise Marks, vp of diversity research at Synovate. Almost half of Hispanics are blue-collar workers and "don't have the opportunity to participate in these types of investment accounts."

But there are also gaps in other financial service areas. Credit card ownership breaks down this way: African-Americans, 69 percent; Hispanics, 51 percent; and general consumers 87 percent. Only 26 percent of Hispanics and 47 percent of African-Americans hold mortgages, compared with 54 percent of general market customers. And while 35 percent of general market consumers have home equity lines of credit, just 23 percent of African-Americans and Hispanics do so.

Hispanics also lag African-American and general market customers by a wide margin when it comes to health insurance. Only 62 percent of Hispanics have health coverage compared to 80 percent for the other groups. This disparity is related in large part to the lack of employer health insurance plans.

Not all of the factors driving this wedge are socioeconomic, however. Cultural differences also play a part. Although 36 percent of Hispanics and 42 percent of general market survey participants "feel that they are treated well by financial institutions," that level falls to 31 percent for African-Africans. And there is a split in the Hispanic responses: Almost 40 percent of those with higher incomes and who are English speaking or bilingual feel they are well treated; only 29 percent of the less acculturated agree.

What can be done to narrow the gap dividing general market customers and Hispanic and African-American consumers in the use of financial products? "Some banks need greater reach-out to the local community," says Elliot Savitzky, vp of Synovate's financial services practice. Institutions must "do a better job of assessing what a community's needs are." Savitzky realizes expanding efforts to help the underbanked is a challenge as banks have become "more risk averse-this is not the type of credit banks are trying to target."

But Savitzky believes that banks should focus on this segment just as they reached out to students. "As each generation turns, they become more acculturated. Longer term the U.S. will grow more diverse, and the sooner banks can develop these groups, the better." (c) 2008 U.S. Banker and SourceMedia, Inc. All Rights Reserved. http://www.americanbanker.com/usb.html/ http://www.sourcemedia.com/

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