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Banks ramp up services to Latino customers


One story that always brings a smile to Diana Gonzales Pauley’s face concerns how a little Hispanic boy was inspired to open a savings account a few years ago.

“After we gave gave the father his laminated account card, the little boy told me in Spanish, ‘I want to open up an account, too,’” said Gonzales Pauley, marketing coordinator for U.S. Bank in Des Moines. “That week, he collected up a lot of cans, and came with about $20 to open his savings account. And he got a little laminated card just like his dad.”

That was four years ago, and that boy, now 8, still comes in regularly to make deposits. “We always tease this little guy that he’ll be the bank president,” she said.

In her past five years with U.S. Bank, Gonzales Pauley has made numerous visits to Central Iowa’s Latino communities, handing out brochures printed in Spanish and talking one-on-one with people about why they should open accounts. It’s just one of the ways Iowa’s financial institutions are increasingly catering to what has become the state’s largest minority population.

“When you come in and you speak their language and you know that you’re going to give them the fine print, that’s where the success is,” Gonzales Pauley said. “If you’re able to speak the language, you’re going to be successful.”

Because many Latinos do not possess driver’s licenses or other state-issued identification, some financial institutions are accepting the Matricula Consular cards issued by the Mexican consulate as identification to open accounts.

Additionally, by providing services such as wire transfers to Mexico and South American countries, bankers hope to tap into a market that has largely avoided using banks in the past. Though it’s difficult to track, one estimate is that Latino immigrants sent $31 billion to relatives in Mexico and other Latin American countries last year.

This month, Omaha-based Commercial Federal Bank introduced VanComFed at its Hubbell Avenue and Southdale branches in Des Moines. The bank bills the service as a low-cost means for both customers and non-customers to send money to Mexico and a dozen other Latin American countries.

Though a number of other financial institutions, among them U.S. Bank and Wells Fargo Bank Iowa, offer similar services, “what sets us apart is the service we’re providing is bringing people into the bank who otherwise wouldn’t come in,” said Laura Castro de Cortes, director of Latino markets for Commercial Federal. The bank’s introductory rate for the service is $6 per transfer through May 10, increasing to $8 for non-bank customers after that date.

Marketing to Latino customers involves a great deal of effort because numerous cultural differences must be overcome, Castro de Cortes said. For instance, Latinos tend to distrust banks because Latin American financial institutions are widely corrupt, she said. Additionally, the one-third of Latino immigrants who don’t speak English are the least likely to have access to banking information and open accounts.

To provide potential customers more information, Commercial Federal has introduced an educational video in Spanish to educate Latinos about such basics as how to operate an automated teller machine, why credit history is important and various types of loans and mortgages.

The video, titled “Yo Se,” or “I know,” is “intended to give Latinos a greater comfort level with products and services most Americans take for granted,” Castro de Cortes said. “With a greater understanding of how to use these financial tools, Latinos will be better equipped to save money, apply for loans, purchase homes and reach other financial goals.”

Such efforts to assist Latinos and other immigrants will benefit the state’s economy as a whole, said Max Cardenas, partnership and training director for the Iowa Center for Immigrant Leadership and Integration. An information clearinghouse funded by the University of Northern Iowa, the center’s Central Iowa office is located in the John and Mary Pappajohn Education Center in Des Moines.

Financial education is a key component of his organization’s efforts, Cardenas said. As a first step, the center in November released the results of a two-year study of immigrants’ entrepreneurial activity in communities with high concentrations of Latino residents.

The study found that the majority of immigrants who opened restaurants, retail shops or other small businesses relied on money from savings, family and friends, not loans from financial institutions, to finance their start-ups. Only about 25 percent of the businesses surveyed used a bank loan, though about half the owners applied for loans.

“Immigrants are a very small share of the market, but they’re one of the fastest-growing segments,” Cardenas said. “And given their lack of experience with financial services, they’re really new customers. And they have the potential to be very loyal clients.”

Next week, the Iowa Bankers Association, in conjunction with the Federal Deposit Insurance Corp., will host the New Americans Task Force, a forum to bring together Iowa bankers with Latino community activists to discuss ways to better serve recent immigrants.

“Our hope is that we will offer products that will make sense for the Latino community,” said Ben Hildebrandt, the IBA’s vice president for marketing and public affairs. “For instance, should we have bank forms printed in Spanish, and if we do, will bankers be able to read them? We have to make sure everything makes sense so that it’s good for the customer.”

The seminar, to be held April 13, is an extension of the FDIC’s MoneySmart seminars, which the IBA adopted 16 months ago to encourage its members to reach out to potential Latino customers, Hildebrandt said. So far, approximately 200 bankers have attended the programs, which have been held throughout the state.

“There are a lot of banks that are understanding the future of the Hispanic market in Iowa,” he said. “Now what we’re doing is casting a larger net, if you will. We want to include the bankers who have attended our seminars, as well as Latino activists.”

The outreach efforts need to be comprehensive, Cardenas said.

“Of course, there’s a need for basic bank accounts and services,” he said. “There is also huge potential for home mortgages, as well as financial services. There are also many successful Latino businesses that could use services such as money market accounts, but they don’t use them because they don’t know about the services.”

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