Customers of Texas National Bank span both sides of the Rio Grande Valley.
They include first-, second- and third-generation immigrants who established businesses in Hidalgo County and consider themselves more Texan than Mexican. There are U.S. citizens who split their weeks and weekends between towns touching both sides of the border. There are also Mexican citizens who travel to Texas so frequently that they maintain accounts at the Texas National.
"There are very few parts of America where you can say there is one community divided by a border," said Joe Quiroga, president of Texas National, which has $650 million of assets and is headquartered in Mercedes. Visitors sometimes wonder why no mountains surround the Rio Grande Valley, but, "We say, the U.S. and Mexico are the two mountains and we're in the middle of it," Quiroga said.
Immigrants are woven so tightly into the fabric of the border towns where Texas National operates that their needs and preferences have influenced digitization projects at the bank, particularly in mobile banking. They also reflect the broader banking needs of Latin American immigrants to the U.S. who regard traditional institutions with apprehension.
"There is a real distrust of banking," said Quiroga. "Traditionally you don't borrow in Mexico. There is very little credit; you do everything out of cash. That same mindset flows over here." The bank struggled to convince its community to take out Paycheck Protection Program loans. Even his own father was resistant, Quiroga said during an event in November
The challenges in banking the broader
She finds there is a lot of trepidation among Latin American immigrants, whether it stems from negative experiences with banks in their home countries that leave a lasting mark or a fear of logging personal information if one is undocumented. While acquiring a credit card is something of a rite of passage in the U.S., Bilonick points out that credit and borrowing happen outside of financial institutions in Latin America, such as through "tandas," where a network of people pool money that participants may borrow.
"It's not even that borrowing is a foreign concept as much as the way we do it here is different," said Bilonick.
On the other side, banks could do more outreach to Latino populations, such as ensuring there are tellers and customer service representatives who speak Spanish.
"The language barrier is huge," Bilonick said. "When you are talking about something as personal as your own finances and hard-earned money, you need to feel that trust."
Quiroga has noticed a reliance on and strong trust in smartphones, which has sharply accelerated in the last few years.
"You would be shocked at how much commerce is transacted at our local flea market on Cash App and Venmo," he said.
That preference has driven the bank to adapt and innovate.
Over the past year, Texas National has introduced capabilities for customers to apply for credit cards, personal loans, auto loans, small-business loans and more online and via its app. The goal is to refine these applications over time to become fully mobile-native — specifically designed for a smartphone, rather than merely mobile-friendly, in other words mobile versions of what exists on the web. Quiroga and his team examined 50 vendors to find a comprehensive solution that included a digital workflow from start to finish, automated underwriting, the ability to upload documents from a phone or computer, automated funding and booking the loan to Texas National's core. He settled on software from Abrigo.
"It wasn't just a jazzy front end," he said.
Still, one challenge has been integrating diverse data fields captured on the front end onto the bank's core. Texas National is "at the beginning stages of the API [application programming interface] world," said Quiroga, noting that Abrigo has built-in APIs that help data flow to the core.
Optimizing applications for mobile makes sense to Bilonick. She theorizes that people appreciate the familiarity of their smartphones and that eliminating human interactions also reduces the fear of discrimination or negative experiences.
The bank is also rethinking how to make the process more customer-friendly beyond the digital aspect. One way is trimming the amount of documentation involved.
"The banking world is fixated on, 'Give me your driver's license, three years of tax returns, your pay stub — the list goes on,' " said Quiroga. "Meanwhile with some fintechs, it's just, 'Give me your name and your Social and we'll figure everything else out.' "
He hopes to find a solution somewhere in the middle. "Do we really need two years of tax returns?" he said. "We're underwriting for today." The bank is exploring how analytics technologies and APIs can help validate identities and information in the background while minimizing the labor for customers on the front end.
There are more projects on the horizon. The bank has partnered with Lendio, a small-business lending company, to pilot alternative underwriting capabilities; the pilot began two weeks ago. This quarter, it also plans to debut a no-fee small-dollar loan built with the community bank and credit union technology provider Velocity Solutions to counter the abundance of payday lenders operating in the bank's communities. Texas National's microloan will let customers borrow up to $1,500, with no fees and an interest rate of 18%.
