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Innovative Banking Products for Underserved Markets
Identify Community and Market Characteristics
• Know your community Countries of origin, major employers, schools, neighborhoods, trusted organizations.
• Know your competition
• Offer alternatives that improve on existing products and address unmet needs Give people a reason to come to you and trust you.
Demographics Survey of 328 Mexican Immigrants, Mexican
Consulate Chicago 2008
• Young community: 57% 18-3434% 35-54
• Low-to moderate annual household income:
35% $0-$15,00034% $15,001-30,00019% $30,001-$50,000
7% Over $50,000• High Savings Rate even in lower income ranges:
Average annual remittances: $2,500
Trends: Income Growth
0%
20%
40%
60%
80%
100%
1-5 Y ear s 6-10 Y ear s 10+ Y ear s
Income by Years in US
$ 0-$ 15,000 $ 15,001-$ 30,000 $ 30,001-$ 50,000
Trends: Services
• Financial service usage changes with time in US:
Years in US % With Accounts % Sending Remittance 1-5 Years 43% 87% 6-10 Years 67% 84% Over 10 Years 77% 32%
Evolution in the Marketplace
0
5
10
15
20
25
30
Low-Cost
Money Orders
No Minimum
Balance
Requirement
Lower Cost
Overdraft
Protection
Free Savings
Accounts
Customer
Service in
Spanish
Remitttance
Service
2004 Survey (33 institutions) 2006 Survey (31 institutions)
Barriers
• For those choosing not to use accounts, major barriers: ID and min. balance.
• Perception that accounts carry high fees.
• Need for immediate access to funds.• Convenience.• Consistent Service, including
language capacity. • Non-traditional credit profiles.
Opportunities• Asset protection: health insurance, auto insurance, life insurance.
• Access to credit: home purchase and small business.• Saving for Education• Cross-border needs• Local community needs: domestic money transfers, loans for citizenship and immigration status.
Case Study: Family Unification Loan
• Loan for immigration services program pilot in Austin, Texas.
• Initial launch led to no borrowers.
• Broadened outreach, engaged more partners, used the media.
• Result: All initial capital investment, $30,000, loaned out in a four-month period.
• Now demand for additional capital and interest in expansion to other geographies.
Effective Market Strategies • Better value is important, but not enough.
• Workforce and atmosphere should reflect the community.
• Meet people where they are—location and services.
• School-based outreach—reaching parents through their children.
• Leverage employer relationships.• Integrate education into financial
settings, such as account opening or taking out a loan.
Importance of Marketing
Appleseed Resources
• Market Information• Consumer Focus Groups• Best Practices• Financial Education
Visit: www.appleseednetwork.org and www.texasappleseed.net
Conclusion“As we try to break some of these consumer behavior patterns… We have to be cheaper and we have to engender a greater degree of trust in us.”
