For the banking industry, tapping the Latino market seems to be like dealing with the proverbial 800-pound gorilla: many ignore it, the others don't know how to approach it. Time to pay attention, though. The U.S. Census Bureau predicts that minorities will outnumber whites in the U.S. by 2042. Hispanics are the largest single minority, comprising 15 percent of the population now, but a predicted 30 percent or 132 million by 2050.

First step: lose the dated geographic misconceptions. Many believe Hispanic populations are concentrated in urban areas and in states like California, Texas, Florida, Arizona and New Mexico, says William McCracken, CEO of SYNERGISTIC Research Corp., but that's no longer the case. Between 2000 and 2006, the state where the Hispanic population grew the most from a percentage standpoint is Arkansas. During the same period, the Midwest's total population grew three percent, but Hispanic growth was 26 percent. In the Northeast the population grew by two percent; Hispanic growth was 15 percent. "Every banker in the U.S., to a great degree, has to face the issue of marketing to Hispanics," McCracken says. "It's no longer the guys in Florida and California's problem or challenge; it's everyone's challenge."

Those that do target this segment, though, often stumble in their efforts. The most common mistake is thinking that the only difference between a Latino consumer and the bank's everyday customer is language. Simply converting all materials over to Spanish will not help a bank capture this audience, says Luz Lopez Urrutia, CEO of El Banco de Nuestra Comunidad, which is a division of Winder, GA-based Peoples Bank. "One of the biggest things in banking to the Latino market is not about language alone," Urrutia says. "Many banks have the belief that in order to have a successful Hispanic strategy, they have to hire bilingual people, take all their product brochures and translate them to Spanish and translate the ATM screens to Spanish."

Urrutia says that traditional banking products and services won't work for many Latinos. Instead, services like check cashing, money transfer and remittances, the ability to get pre-paid communications products and free money orders for bill pay are in high demand. "Once you get them in there and you get them to cash their check, send their money home, make their bill payments through you, then you can start building a relationship, building their trust, and then upgrade them into a banking relationship," she says. "Little by little, you start building that trust and then one satisfied Latino customer will refer three to you. That's really how we have gotten all of our customers."

There are 21 different Spanish-speaking countries and each one has a different cultural background. While Urrutia says that having a Mexican or a Puerto Rican or a Columbian strategy won't be effective, it is important to understand their backgrounds. Understanding their unique challenges is also key. "People from Latin America don't have it that easy because, generally, they may not have documentation that all banks accept. They have acceptable documentation, but not all the banks understand that."

But, for risk management purposes, there are alternatives that will suffice for some types of accounts. Among them: Does this customer pay their bills? How long has this customer lived in the United States? If they rent, do they have good payment history? Do they cash their checks and who is their employer?

McCracken says that a strategy that has been effective for some banks is partnering with Hispanic community groups. "Some of the larger banks in the U.S. that have been successful in marketing to Hispanics-you can look at Wells Fargo, U.S. Bank, Bank of America and others-have chosen to do so by partnering with Hispanic community groups," he says. "To have them recommend and endorse your products and institution, appear with them jointly in community events, is of incalculable value to generate the trust that is needed to have Hispanics welcomed in your bank." (c) 2008 U.S. Banker and SourceMedia, Inc. All Rights Reserved.

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