Integrating new card products into underserved, but financially viable, cultural groups takes more than just marketing campaigns translated into different languages or a flashy ad campaign using consumers from those communities. It takes trust, financial experts say.
And some card companies are using high-profile personalities and organizations to help create trusted bonds with consumers.
MasterCard Worldwide, for example, has recruited celebrities from both the black and Hispanic communities to reach out to consumers in those racial groups to help teach them about personal finances and to explain how using card payments can enhance their lives.
Taking another approach, Visa Inc. is using well-known sports stars to promote financial literacy among Hispanics.
Certain groups do not trust banks, which has necessitated the need to use marketing strategies specific to their cultures. Indeed, historical experiences with financial institutions in immigrant groups’ home countries have molded ill will, says Leylha Ahuile, senior multicultural analyst at Mintel Comperemedia, who has written reports about cultural groups and their attitudes about financial services.
Hispanics are 40% more likely than are non-Hispanics to be uncomfortable entrusting their money to a bank, and more than one-third of Hispanics in the U.S. use only cash to pay their bills, according to Mintel research on Hispanic finances and financial services.
“You have to keep in mind that most Hispanics come from countries where banks could just get shut down overnight and their money is gone,” she says of the government unrest in many Latin American countries that affect banking. “The other thing is that, in Latin America, you had to have certain level of income to even have a bank account.”
And financial products in the Unites States are complicated to newcomers who do not speak English, Ahuile says. “I’m fluent in English, and I have a hard time understanding terms and conditions of products here,” she says, noting that even when translated banking terms are confusing to consumers not familiar with banking products.
For consumers in the African American community, trust also becomes paramount to make them secure in having and using payment cards. Many individuals in that culture mistrust the banking industry because of past racism, bad experiences from older family members or the fees charged for services, including overdrafts, says Ahuile.
“Up until the 1960s, African Americans did not have much access to financial institutions,” explains Ahuile, noting even today not many banks have branches in black neighborhoods. And it fuels mistrust any time a parent or a grandparent in the black community has a negative banking experience, she says.
Still, both the black and Hispanic communities are viable markets for card issuers, observers say.
Hispanics represent the biggest minority group in the U.S., with purchasing power projected to reach more than $1.2 trillion by 2012, according to Mintel research. Moreover, a significant portion of the Hispanic population does not participate in the U.S. banking system.
Understanding this, MasterCard in 2009 began a relationship with Spanish-language media powerhouse Univision Communications Inc. Univision long has been known as one of the most-trusted news and information sources for Hispanic consumers in the United States, says Ahuile.
As part of that effort, MasterCard initially introduced the Univision MasterCard prepaid card, called Tarjeta Univision MasterCard Prepagada, and a MasterCard gift card, called Tarjeta de Regalo Univision.
A more concerted effort to attract Hispanic consumers began in 2010 with MasterCard’s plan to team with Univision financial expert and role model Julie Stav, a Cuban immigrant who struggled with financial problems and eventually became an expert on financial issues. Stav hosts her own shows through Univision and has become part of MasterCard’s financial-literacy effort by speaking at seminars for MasterCard’s Financial Education program, Alex Liu, MasterCard vice president of global prepaid products, tells PaymentsSource.
Considering some cultural groups’ mistrust of financial institutions and their lack experience with card products, MasterCard recognized that building trust was a major issue.
“Our key barrier was education and getting these consumers to try something new,” says Liu. “It’s a complicated message and a whole new way of managing money for innately conservative groups.”
MasterCard sought to create its grassroots program using live seminars with culturally relevant spokespeople, such as Stav.
“Working with Julie Stav totally makes sense,” says Ahuile. “One thing I talk about in my reports is that banks need to take a more educational approach to their marketing to cultural groups, and Stav is a very trusted source for financial information,” says Ahuile. “She’s like the Suze Orman of the Hispanic community because she tells consumers things in terms that they can understand.”
Stav’s difficult past also instills trust from the Hispanic community because she understands financial struggles, Ahuile adds. “There is no one as well known and has been around as long as Julie Stav,” she says.
Many Hispanics rely on check-cashers and funds-transfer agents, but the market is ripe to move them to prepaid products because of their reliance on cash. And those Hispanics who use debit cards tend to use them frequently, suggesting their desire to use banking products increases once they understand them, according to Mintel.
Financial institutions that build long-term relationships will benefit as these clients graduate to higher-revenue banking products, including credit cards, Mintel says.
Meanwhile, Mintel predicts the black community’s purchasing power could reach $1.1 trillion by 2014. Some 23% of black households represent 45% of the total black buying power, but many of these higher-earning households are still underbanked, according to Mintel’s report.
Younger blacks and black households that earn less than $75,000 per year have the greatest mistrust of banks, and younger black consumers also are the least interested in acquiring debt, another nod to the demand for prepaid products, Mintel contends.
This group of black consumers overall also rely on alternative financial services, such as check-cashers and payday-loan operations, and Mintel suggests financial education is key to financial institutions gaining their trust.
To address the needs of the African American community in its grassroots financial-education effort, MasterCard tapped Chris Gardner, the inspiration behind the film “Pursuit of Happyness,” to run similar seminars in black communities around the country, including New York, Atlanta and Los Angeles.
“Using Chris Gardner is a great strategy to target the black community because, just like the Hispanic community, there needs to be more educational marketing,” says Ahuile. Gardner’s rags-to-riches story is one that many in that community find trustworthy because he was homeless and faced many other challenges common in the community, she says.
Live education events enables individuals in the black community to talk and ask questions, Ahuile says. “That’s the way to go about getting them interested in financial products like credit or prepaid cards,” she says. “Just offering a lower fee or interest rate is not going to do the trick.”
Visa also offers financial-literacy programs but takes a different tact. Instead, it uses sports stars to gain attention and trust from the communities they aim to serve.
On Feb. 12, for example, Visa hosted a session in Phoenix around its FIFA World Cup-branded Financial Soccer educational video game featuring Mexican soccer star Claudio Suarez to help improve financial literacy (
With the size of these multicultural consumer segments and their potential to move from cash to card products for payments, the strategy to promote financial literacy and use well-known figures to instill trust is a sound one, says Ahuile.
Both Visa and MasterCard say they plan to continue their financial-literacy efforts to cater to multicultural markets, but neither revealed upcoming events for 2011.
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