May 17, 2005

Hispanics Banking in Alabama Wachovia and Banco Hispano

Many Hispanics who live and work in the United States send millions of dollars to relatives in their native countries each year - and financial institutions in Alabama, as well as those across the country, are beginning to reach out to the largely untapped Hispanic market.

Vicente Lorenzo, for example, sends money religiously to his wife and two young children in Acambay, Mexico.

"I send them money every week," said Lorenzo, 30, who has lived and worked in Alabama for five years. Close to 80 percent of what he makes working in construction goes to his family, and he sometimes sends as much as $1,200 at a time.

Lorenzo is among thousands of Hispanics in Alabama who send millions of dollars to Latin America each year. A 2004 report by the Inter-American Development Bank showed that 78 percent of Alabama Hispanic immigrants regularly send money to family and friends.

The bank conducted surveys in 3,800 households from February through April 2004 for the report. Last year, Hispanic immigrants in Alabama collectively sent $149 million in remittances. Individuals sent an average of $2,797 in the course of a year, with individual transfers averaging $260.

It is estimated that 10 million Latin American immigrants nationwide sent an average of 10 percent of their household incomes, according to the report. Increasingly, big banks aren't content to let traditional wire transfer services like Western Union keep all the fees associated with sending that money.

For example, Charlotte, N.C.-based Wachovia and Banco Hispano, a division of Bank of Alabama, are luring Hispanic customers by offering services such as wiring money to Mexico, Central and South America and the Caribbean. Wachovia, which recently purchased Birmingham-based SouthTrust Bank, later this year will bring to Alabama its "Tarjeta Dinero Directo," or "Direct Money Card." The ATM-type card allows customers to wire money to Latin America, the Caribbean and Spain.

Wachovia already offers the service in Texas and Florida.

Angela Parker, spokeswoman for Wachovia's Miami branch, said the program is part of a larger banking package, "Cuenta Con Todo," or "Account With Everything," designed to attract Hispanic customers.

Since Hispanics have become the largest ethnic group in the United States, financial institutions nationwide have increased their advertising and marketing budgets to get their business. Many banks already have pamphlets in English and Spanish with messages that appeal to Hispanics.

Louis Barajas, financial analyst and author of "The Latino Journey to Financial Greatness," said banks are beginning to see a real benefit in tapping into the Hispanic market, especially because this community lacks a banking relationship history.

It's easier for banks to target and attract customers who don't already have savings or checking accounts than to lure customers from other banks, he said.

"They know there is a huge unbanked market they can tap into," Barajas said. "Banks are starting to realize the need to get that customer."

Bank of Alabama did exactly that. Last year, the company opened a bilingual branch, Banco Hispano, that caters to the specific needs of the Hispanic community, and a second branch is planned. Among other things, Banco Hispano carries the "Tarjeta Amiga," or friendly card, which allows individuals to wire money to friends and families not only in Latin America but throughout the world. The card works much like a prepaid card in which individuals can control how much money friends and family can withdraw.

Many banks wishing to provide money transfer services will have to compete with well-established wiring services, such as MoneyGram and Western Union, that have provided Hispanics with remittance services for many years but may charge up to 15 percent for sending money, Barajas said.

But he sees the competition for potential Hispanic customers as good.

"Some smart banks are putting together a program that includes hiring bilingual representatives who understand the culture," Barajas said.

Nationally, some banks, including Bank of America and Wells Fargo, are providing free money wiring services with the opening of a savings or checking account.

But Barajas said it will take some time before the Hispanics are able to trust financial institutions.

He said it will take recent immigrants from two to five years to begin building bank relationships as they become acclimated and banks cater to them.

Once in the United States, many Hispanic immigrants are hesitant to seek out a banking relationship because they bring the fears and lack of trust many had about banks in their homelands, Barajas said.

Others, especially the poor, may not be experienced with the banking system at all, he said.

Melisa Mendez, branch manager with Banco Hispano, said the branch offers free 45-minute courses on basic banking for new customers.

Everyone who opens a savings or checking account with the branch is required to take the course, she said.

A lack of banking history eventually becomes a barrier for immigrants, especially if they want to purchase a home or car or build credit history, Barajas said.

A number of banks in Alabama, including Wachovia and Banco Hispano, are accepting the consular identification card and federal tax identification number as a form of identification to make banking more accessible for Hispanics to open accounts. This allows individuals who are in the country illegally to open bank accounts and transfer money to their families in their native lands.

But for many Hispanics, wiring money from Hispanic markets is still the first choice.

Colombian-born Marta Cienfuegos is the owner of Imperio Tienda Hispana in Hoover, one of many stores providing money transferring services to the Hispanic community.

"We have customers that have been sending money with us since we opened 11 years ago," Cienfuegos said. She said the average money transfer per wire is between $200 and $300.

Big banks still haven't attracted customers like Ana Elena Paiz, who recently sent money to her sister-in-law in El Salvador using Ria, a wiring service provided at Imperio Tienda Hispana.

The 31-year-old said she prefers sending money there because she can speak Spanish and pick up anything else she may need on her way out.

Posted by Ahorre at 08:04 PM

May 04, 2005

U.S. Hispanic Financial and Banking Opportunities

U.S. Financial Institutions Banking on the Untapped Hispanic Market
Mintel Reports That Numerous Opportunities Exist for Financial Institutions Within the U.S. Hispanic Community.

Almost half of Hispanic adults do not own checking accounts, according to a recent report on Hispanics and Finance from Mintel International Group.

CHICAGO, IL (MARKET WIRE) Almost half of Hispanic adults do not own checking accounts, according to a recent report on Hispanics and Finance from Mintel International Group. With more than $414.2 billion in buying power reported in 2003, the Hispanic community provides strong opportunities for economic development and growth. According to Mintel, the majority of survey respondents without checking accounts cite lack of money, trust, and documentation as key obstacles. Many Hispanics also substitute checking accounts by paying with cash and money orders.

Since Hispanics are the largest minority group in the U.S., many financial institutions are increasing their advertising and marketing budgets. In 2004, several banking institutions began to target the Hispanic community more heavily. According to Mintel's Comperemedia, a media monitoring resource, companies such as Bank of America and Bank One increased efforts in Hispanic marketing last year with major campaigns.

"The Hispanic community is a major untapped market for U.S. banks," said Carrie Merritt, senior financial analyst for Mintel. "The average disposable income for the Hispanic market increased by almost 48% between 2000 and 2003. This provides an excellent opportunity for financial institutions to explore more initiatives within this rapidly growing market."

One of the biggest avenues for growth in financial institutions stems from the remittance and wire service industry, which is currently dominated by well-established companies such as Western Union and MoneyGram. More than $30.1 billion in remittances were sent to Latin America last year, with $12.5 billion sent to Mexico alone in the first nine months of 2004. The remittances to Mexico were up 23.8% in comparison to the same 2003 time frame. Both Bank of America and Citigroup are among the financial institutions that have expanded their competitive efforts in the remittance arena.

In addition to competing with remittance companies, check cashiers and payday lenders also provide strong competition for the Hispanic dollar, specifically for lower-income families.

"There is a key communications avenue available to increase trust and develop stronger relationships within this segment, specifically by increasing the availability of bilingual marketing materials and services, " Merritt said. "Mintel's analysis shows that U.S.-born Hispanics are actually more likely to distrust banks than foreign-born Hispanics. This is in contrast to the claims of some sociologists that foreign-born Hispanics are less likely to trust banking institutions, particularly because of the lack of such institutions in their home countries."

Posted by Ahorre at 11:27 AM