Lender's Guide to Hispanic Marketing

by Kenneth Rishel

How to tap into the $1 trillion+ purchasing power of this market by 2020 and $2.5-$3.6 trillion by 2050

[Editor's Note: Ken Rishel is a regular contributor to these Featured Articles. The thorough, in-depth nature and exploration of his topic this month warrants a full-length presentation, complete with bibliography and notes.]

Content Summary

The purpose of this paper is to provide lenders with a roadmap to developing and implementing an effective Hispanic marketing program. With 60 percent growth in population between 1990 and 2000, Hispanics have become America's fastest growing minority group and represent the majority of residents in many U.S. communities in Arizona, California, Illinois, Texas and Florida.

After the 2000 Census, Hispanics became the largest minority group representing 12.5 percent of the U.S. population. This growth is expected to continue, with Hispanics expected to represent 25 percent of the U.S. population by 2050. In addition, the Hispanic market is becoming increasingly affluent, with the rate of $100,000-income earners with assets in excess of $500,000, exceeding by eight times the non-Hispanic segment of the U.S. While Hispanics are a large and growing population, they have historically eluded traditional financial institutions for various reasons including fear, ignorance and accessibility.

This work provides lenders with the background needed to determine who the Hispanic market represents and whether it is a market they should pursue. It provides important details regarding the segments that comprise the Hispanic market and the differences and similarities among the segments.

This paper discusses in detail the challenges that lenders face with regard to marketing to Hispanics as well as detailed solutions to address those challenges. The paper concludes with product and service recommendations aimed at increasing Hispanic market share.

The following topics are addressed:

1. Who does the Hispanic market represent?

2. Why is the Hispanic market important?

3. What are the challenges associated with Hispanic marketing?

4. What are the solutions to the challenges?

5. What products and services are most appropriate for reaching the Hispanic market?

Sources of information for this study included numerous current newspaper and magazine articles as well as marketing firm reports, census data and Hispanic marketing seminar information.

The sources of information provided the following findings related to the topic:

1. Developing and implementing an effective Hispanic marketing program requires significant effort and resources.

2. The Hispanic market is comprised of distinct sub-groups, each with its own degree of acculturation and language preference and each requiring a different marketing approach.

3. Marketing to the Hispanic market requires a greater degree of handholding than marketing to non-Hispanics and requires lenders to enter the Hispanic community to gain trust and respect before Hispanics will proactively seek to do business.

4. Once trust and respect is established with the Hispanic market, this group is extremely loyal and is likely to remain a long-term customer of the bank.

Analysis led to the following conclusions:

1. Lenders should carefully assess whether or not they wish to enter the Hispanic market because a successful venture requires significant financial and human resources.

2. Lenders that choose to fully commit to the Hispanic market will be positioned to take advantage of a growing segment of the population, in terms of size, affluence and profitability.

This was written to be of particular interest to owners, marketing managers, branch personnel and others with an interest in expanding the reach of a lender from a customer and profitability perspective.