Credit card providers frequently avoid minority communities, deeming these often lower-income households too great a credit risk. But with the Census Bureau predicting that African-, Asian- and Hispanic-Americans will account for 45 percent of the U.S. population by 2020, ignoring these groups could be disastrously short-sighted.

With this in mind, Ken Klotz, president of Columbia Capital Corp., cites a growing need for credit in subprime lending markets, especially by those minority consumers who have yet to establish credit records. "We're not just talking about the social and economic benefits that credit opportunities can bring to minorities," he says. "We're also talking about an essentially untapped market that needs to be addressed."

To this end, Columbia Capital Corp., based in Abilene, TX, is inking a deal by year-end with a minority empowerment group-Klotz declined to name the group-to gain access to its members in exchange for creating jobs in those communities.

Minority empowerment groups, such as the national Rainbow Coalition, are often eager to educate financial services institutions to help them meet the needs of minorities.

The new venture will be a departure for Columbia Capital, since it will market the credit cards directly to consumers and not offer them through its network of banks, its traditional method of operation. The firm hopes to roll out the program by the first quarter with ensuing job creation in telemarketing, customer services and collections. Agreements with additional empowerment groups is possible.

Klotz says, "We have a lot of negotiating and a lot of training to do in order to get the venture going, (But) by combining with empowerment groups to help us market credit cards to underserved groups, we expect to grow our portfolios and expand our business. We also hope to create jobs for minorities.

"The more business volume we create in minority areas, the more jobs we can provide," Klotz says.

Through subsidiary First Independent Computers, Columbia Capital currently provides services for 14 banks nationwide that have not achieved the economies of scale to operate their own in-house programs and systems. These lines of business include credit card and debit card processing, backroom services for banks such as electronic processing of checks and commercial loans, and paper distribution services such as mailing bank and credit card statements.

For instance, Delaware Bank Card recently asked Columbia Capital to provide card embossing, encoding services and statement processing for a new line of ATM and check cards. The firm declined to name other customers.

-J.Peterson

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