If Rios’ methods seem a little unconventional, it may be smart business. Latinos are the fastest-growing market in the banking industry: The Federal Deposit Insurance Corp. says that by 2015, about half the retail growth at U.S. banks will come from Hispanics, more than 50 percent of whom (about 20 million) don’t yet have checking accounts. By some estimates, all this new business will be worth $200 billion. Banks, especially in the Southwest, are offering myriad enticements to this underserved population. Forget the free toaster oven. Bank of America, based in Charlotte, N.C., is luring Latinos with low- or no-fee remittances to Mexico, after finding that 65 percent of Hispanics who send money back to their native countries do so without bank involvement, mostly at money-transfer stores. Wells Fargo has installed satellite branches in non-traditional mom-and-pop outposts like notary offices. No driver’s license? No problem. Many banks have begun accepting Mexican Consulate identification cards, known as “Matricula Consular,” to customers looking to open an account, cash a check or send money.
Historically, Latinos have been skittish about putting their bucks in American banks instead of under the mattress. Many immigrants, with poor English skills, are intimidated. What’s more, Latinos, more so than other populations, can be a fatalistic bunch: According to one study by the Pew Hispanic Center, compared to some other groups, older Latinos in the United States feel they don’t have much control over what happens to them. One upshot of that is that many might see less of a need to map out long-term financial goals. “A good portion of who we deal with are low- to moderate-income families that are trying to navigate the financial world,” says Wells Fargo’s Rios. Thankfully for the bankers, second-generation Latinos don’t put quite as much weight on destiny.
To win over the immigrants and their kids, banks are doing back flips to show they are simpatico. In April, Bank of America used “Mexican Mother’s Day”—which it says is the highest remittance holiday of the year—to kick off a summer-long “Fiesta Fridays” promotion, where customers could learn in Spanish or English about the bank’s services. Other components of the bank’s Hispanic outreach program have included hiring an army of bilingual tellers, promoting Spanish-language ATMs and opening banking centers in bodegas, small neighborhood stores with a Latino customer base. The bank likes to think of itself as “culturally relevant and welcoming,” and while that may seem like corporate-speak, so-called “cultural relevance” is key to attracting Latino dollars, says Bank of American spokesman Diane Wagner. Latinos opened about 25 percent of the bank’s four million new checking accounts last year, and since September 2005 the B of A has handled more than $126 million in remittances.
Not to be overshadowed by the 500-pound gorillas in the industry, some new commercial banks have emerged that cater almost exclusively Latinos. Promérica Bank opened earlier this month in downtown Los Angeles, and touts itself as “the first majority Latino-owned business bank to form in Los Angeles in 30 years.” A week earlier, America’s United Bank set up shop in nearby Glendale, Calif., and declared that it is “believed to be the first Hispanic-owned bank to open in the state of California in over 30 years.” Gil Dalmau, president and chief executive of America’s United, says, “The commercial banking industry here hasn’t had top-level Hispanic banking executives for many years, but now we can do this.” His institution opened with $30 million in funds. “Over the years there has very gradually been an increase and acculturation in the Hispanic community. Now, the market is huge.”
Of course, the retail banking industry isn’t just interested in offering checking and savings accounts to Latinos. Most of the major banks are also vigorously promoting credit cards. And because Latinos earn on average less than whites, and may not have a credit history in the United States, they are not always eligible for the most attractive interest rates and lending terms. At a time when the average American family owes more than $9,000 in credit-card debt and is paying an increasingly large percentage of their income to service that debt, adopting the American way of personal finance may have a downside.
Bankers are also wooing commercial accounts among the growing number of Latino small businesses. Wells Fargo seeks to grant $5 billion in loans to Latino businesses by 2010, and it’s ahead of schedule, with nearly $4 billion on the books. With a loan from America’s United, Silvio Delgado hopes to grow his own collection of companies. A Cuban immigrant, Delgado, 68, settled in southern California in 1968 and eventually opened several small businesses—an insurance brokerage, a real estate sales company and an income tax and accounting firm—which he operates in North Hollywood. He’s looking to expand, and he needed some cash. A longtime acquaintance of some of America’s United network of Latino investors, he readily got what he needed. “There was no shopping around. I’ve known them for a very long time and that is what’s important. I recommend it to all the Spanish-speaking people I know—that they can trust these guys,” he says.
Trust and loyalty can’t be underestimated when it comes to attracting—and retaining—Latino customers, bankers say. “They tell their family members and their neighbors, and they’re going to remember what bank gave them their first account,” says Wells Fargo’s Rios. Money may not grow on trees, but as Rios combs the fields for new accounts, he knows that proper attention can yield a bumper crop.
