Most banks aiming to reach Hispanics are doing things like making branches more colorful and posting signs in Spanish, but a North Carolina bank is taking a different approach: setting up shop in the small grocery stores known as bodegas.
Last month the $500 million-asset Citizens South Bank opened its first Bodega Bank branch in its hometown of Gastonia. Kim S. Price, Citizens South's president and chief executive, said that if the branch is successful, his company would open others in western North Carolina.
Consumers can cash checks, transfer money to Mexico, and even open accounts at the kiosk-like branch. Citizens South, whose employees will run the branch, hopes that customers of the bodega will come to trust the bank and become borrowers, Mr. Price said.
"They have developed a trust and a bond with the bodega owner and go to him for things like how to get a driver's license or how to deal with health-care issues," he said. "So its only natural for them to come to him for their financial needs."
Mr. Price said he decided to try out the concept because of the rapid growth of North Carolina's Hispanic population. From 2000 to 2003 it rose 23%, five times as quickly as the state's total population, to 466,704, according to the Census Bureau.
Citizens South's planning began a year ago, when it partnered with the $40 billion-asset Banorte Bank in Mexico to research the lifestyle and banking patterns of Hispanics in North Carolina.
"We did a lot of research into cultural barriers and their experience with the banking system in Mexico, and bringing banking to them" - as opposed to trying to entice customers into traditional branches - seemed like the best idea, Mr. Price said.
Though Banorte has remittance relationships with several other banking companies, including Wells Fargo & Co., it also provides Citizens South with consulting services and sent employees from its Mexico branches to Citizens South help it develop the new strategy.
Dozens of banks nationwide are devising ways to attract Hispanics. Last year the $741 million-asset Flag Financial Corp. in Atlanta set up Spanish-language branches, bearing the brand El Banco de Nuestra Comunidad, that looked more like check-cashing outlets than traditional branches.
Others are marketing to Hispanics by running ads on Spanish-language television and radio stations.
However, Citizens South's bodega strategy appears to be unique, according to James Ballentine, the director of community development for the American Bankers Association. If the model succeeds, other banks struggling to attract Hispanics might follow suit, he said.
"Clearly, in-store efforts to reach other populations have been successful, so to target the Hispanic population through this makes good business sense," Mr. Ballentine said.
Mr. Price said Citizens South is more than willing to provide consulting services to any bank interested in copying its model.
David Honold, an analyst with Keefe, Bruyette & Woods Inc. in New York, said the approach is a low-cost way to enter a potentially lucrative market.
"It's a great opportunity to boost fee income without taking on too much," Mr. Honold said. "And the opportunity down the road is pretty significant, because over time these transactional-based customers could evolve into full banking relationships."
