Banking: Why Engage Underbanked Hispanics to Differentiate? [INFOGRAPHIC]

Wednesday, August 24, 2016

The underbanked (#1 source of future banking growth) are disproportionately Hispanic.

 

The financial services industry is experiencing serous existential threats due to the commoditization of retail banking products, technology-based disruption of traditional business models and a lack of consumer trust following the 2008 financial crisis. Thus, becoming more customer-centric has become one of the imperatives for banks to differentiate their offering.

 

According to a 2014 KPMG survey, the underbanked represent the #1 source of future banking growth. Underbanked consumers are those who have a checking or savings account but also conduct transactions at alternative financial services (AFS) locations such as stores that offer money transfers, check cashing and payday loans. Closely related, the unbanked, those without bank accounts, also represent a significant opportunity for new customer acquisition (hence identified as the #5 source of future growth by banking executives).

 

(Click on image to view full infographic)

Customer-centricity to engage the unbanked and underbanked means thinking Hispanic, since:

✔ 28% of Hispanics are underbanked compared to 19% of non-Hispanics;

✔ 20% of Hispanics are unbanked compared to 7% of non-Hispanics; and

✔ In the Top 5 U.S. DMAs (NYC, LA, Chicago, Dallas, Houston) 1/3 to 2/3 of the unbanked and 1/4 to 1/2 of the underbanked are Hispanic.

 

Plus, Hispanics represent a large and desirable sub-segment of unbanked and underbanked consumers because:

✔ There are 5.8 million Hispanic households that do not use traditional financial institutions when conducting their routine financial business;

✔ They are as likely to be homeowners (47% vs. 53% of underbanked non-Hispanics); and

✔ They are less likely to have incomes below $15K (42% vs. 61% of unbanked non-Hispanics).

 

Immigration status should not be a barrier to engaging unbanked Hispanics – only 15% of Spanish-dominant households say that they can’t open up a bank account due to ID, credit or banking history problems. Instead, promoting cost-effective and mobile international money transfers might allow banks to steal customers from AFS providers. It is estimated that the annual AFS transaction volume attributable to Hispanic households is $64 billion.

 

Thus, unbanked and underbanked Hispanics represent a key opportunity segment for traditional banks. According to a 2015 AHAA study, a 5 point shift in advertising allocation from English to Hispanic media results in a Total Market revenue boost of 6.4 points in Revenue CAGR for the Financial and Insurance sectors. 

 

While Wells Fargo and JPMorgan Chase are the traditional banks that lead the charge on Hispanic media investment, the Financial and Insurance sector only allocates on average 5.5% of its advertising budget to Hispanic, which means that many key players still have the opportunity to drive growth by investing to engage Hispanics.

 

 

 

Please reload

Please reload

Get Hispanic  marketing, selling & merchandising advice in an upcoming blog post

"Sandra's expertise and familiarity with the Latin Markets in the U.S. and outside are absolutely world class. In addition her ability to keep the client calm and moving in the correct direction was invaluable."

— Eric Stein, Partner | ES Web Marketing

Get Hispanic Marketing, Selling & Merchandising Advice

Follow Us

  • LinkedIn - White Circle
  • Twitter - White Circle
  • Facebook - White Circle

DIAZ&CO. Hispanic Experts, Inc.
(646) 580-5842
sdiazandco@gmail.com

 

44-70 21st Street #3020

Long Island City, NY 11101

© 2012-2018

DIAZ&CO. Hispanic Experts, Inc.
All Rights Reserved.

Website Created By:

Nindy Design Studio

The information contained in this website is for general information purposes only. The information is provided by DIAZ&CO. Hispanic Experts, Inc. and while we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information, products, services, or related graphics contained on this website for any purpose. Any reliance that you place on such information is therefore strictly at your own risk. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of profits, arising out of, or in connection with, the use of this website.