Providing Financial Services to the “Unbanked”

An article from the website Hispanic Bank Marketing cites that roughly 56 percent of Latinos are currently “unbanked,” meaning that they do not use financial institutions to keep their money safe and grow their savings.  Why such a high percentage?  The usual suspects of distrust, lack of accessibility, language barriers, and lack of understanding about how financial institutions can help come into play.

So what can banks and credit card companies do to reach out to this growing demographic in such a way that builds trust and shows Latinos how using financial institutions can be beneficial?

1. Having Spanish translations of flyers, publicity, forms, and contracts is always an excellent start.

2. Since online banking is becoming easier every day, a bank should have an easily navigable website available in Spanish.

3. At least one fully bilingual staff person should be available to answer questions, process transactions, and open accounts.

• 4. Banks and lenders may want to consider providing financial literacy training in community settings (such as at churches or community centers) with the aim of educating potential customers rather than selling products.
• 5. Once a bank representative finds a group to provide onsite financial literacy training to, she can offer add-on services such as one free credit counseling session at the bank.

Many Latino immigrants arrive in the U.S. with alternate ways of saving money.  An example of this is the Mexican tanda which allows a group of people to pool their savings over time so that each receives a large lump sum, then used to make a larger purchase or down payment.  And though remissions to family in one’s home country are decreasing in this economy, many Latinos continue sending potential savings back home. 

Most likely the latter situation will not change, and is indeed an important part of the Latino immigrant experience.  But by working with Latinos who are uneasy about putting their savings in the bank or nervous about cutting into their remissions, financial institutions can educate Latinos about alternate ways of savings and creating a long term safety net for their families both here and abroad.