Business growth can come from many sources. In retail banking, one of those sources is customer acquisitions. And, while Hispanics are adding more people to the population than any other subset, not much is being done to acquire them as customers and help them reach their full financial potential. U.S. Hispanics are on an upwardly mobile track; here are a few reasons why partnering with them can be mutually empowering.
They’re Younger—and Live Longer. Partnerships that are built early foster loyalty. With a median age of 27 (15 years younger than non-Hispanic Whites) and a greater life expectancy (84 vs. 79) (1), Hispanics represent a longer life time value. Once you’ve initiated the relationship, make it meaningful and constant.
Experiencing Critical Life Stages. First time experiences are pivotal moments for banks to start communicating to consumers. The start of college, when students need access to transactional accounts, is one of those moments. Banks will have an increasingly Hispanic higher education population to start engaging—the share of Hispanics with a college degree will grow 34% in the next 20 years. (2)
Another life stage is the first job. And with more higher-educated Hispanics comes more employment. 65% of the net increase in the U.S. Labor Force from 2014-2034 will be Hispanic. (2)
Have Unmet Financial Needs. Hispanics already account for a large share of the growth in financial services, including:
- all of the growth in checking and savings accounts (5.8% vs 0.3% for NH) (3)
- 5x+ debit/ATM card growth (33% vs 13% for NH) (4)
As the wallets of this demographic grow, they will increasingly look to institutions to provide products that meet their unique needs. For example, only 77% of Hispanics have a savings or checking account vs. 88% of the NH population. (3)
Mobile-Forward. In our Leading The Change conference, Wells Fargo SVP of Consumer Segments Mariela Ure talked about how she approaches building a strategy. Identifying marketplace trends is one step, and, she found one that was impossible to ignore—Hispanics as digital and social power users. Hispanics have a higher penetration of smartphone usage than total population (83% vs. 79%) (5) and they over index non-Hispanics in mobile banking usage.(6) Banking institutions are increasingly acknowledging mobile as an important channel to gain acquisitions— brands like Wells Fargo and Chase have developed full Spanish-language banking apps they prominently promote in their Spanish-language campaigns.
Sources: 1) Nielsen, The Multicultural Edge: Rising Super Consumers. 2) IHS Economics. Hispanic Immigration and US Economic Growth, February 2015. 3) Scarborough USA+ 2015 Release 1. 4) Simmons NCS/NHCS Spring 2015 FY; Base: A18+. 5) Nielsen Mobile Insights Q3 2015. 6) Simmons Fall 2014 A18+.