La Oportunidad: Hispanics and Personal Finance
As part of #HispanicHeritageMonth, Simmons Research decided to take a look at Hispanics and Financial Services, to take a dive into how this group can be best served by marketers.
The Hispanic customer is an ever-growing cohort in the United States, with a number of positive opportunities, but this market continues to be underserved within the financial services marketplace. American Hispanics tend to be slightly more unbanked (17%/117) than adults in general. They are also less likely to own their home; nearly one-half rent (48%/156) and the other one-half own (50%/74) – in comparison with all adults, where 31% rent and 67% own. That said, if we look at prospects for future home-buying in the next year, there are some great opportunities for marketers to reach out to Hispanics – 2.3 million plan to buy their first home in the next year (index: 158), an additional 1.5 million current homeowners plan to buy a new home in the next year (index: 120), and another 1.3 million plan to refinance their home (index: 135). In addition, 13% plan to be in the market for a vehicle in the next year, either a used one (9%/110) or a new one (6%/118) – or both, yet another opportunity for marketers at automobile and financing companies.
Other financial services also show less penetration than the overall market as well. 50% of Hispanics have a credit card, compared with 70% of non-Hispanics, but there is more parity along the debit card route, with 75% of Hispanics having one as compared with 78% of non-Hispanics. In terms of investments, slightly over half (53%) of Hispanics report owning any investment, which indexes at 74 compared with the adult population of the US. In terms of loans, the largest percentage of Hispanics (41%) report having no loans at all, which is 16% higher than adults overall. For those that do have a loan, the top 3 are auto loans (21%), home mortgages (15%), and student loans (7%), all of which occur at a lower rate than their adult (and non-Hispanic) peers.
For financial institutions, the growing Hispanic market represents an opportunity to reach receptive customers. They are more likely than all adults to say they will pay any price for good financial advice (index: 134) and are also more likely (index: 170) than all adults to find ads for financial services interesting. Education may be the way to reach some of these customers; 31% say they are no good at saving money (index: 123), and one-quarter say they are uncomfortable trusting their money to a bank (index: 122). But others may require a different tactic; 54% say they are careful with their money, and 47% consider themselves good at managing their money. In this case, an emphasis on trust and planning may drive business.
When we take a look at those Hispanics who have a bank already, branch location is the primary driver – 46% say this was the reason for choosing their bank. Other important features include rates and fees (27%) and word of mouth – recommendations from friends and family (18%). But when we drill down into what is more likely to drive them to a particular banking partner, bilingual/multilingual services lead the list, with an index of 599 compared with all adults. Other important and more likely drivers include the availability of financial advisers (180), word of mouth from friends, family, and peers (128), and convenient operating hours (119) – especially those outside of the normal “banker’s hours” that may conflict with their schedules. It is key for marketers to embrace messaging and services around the factors that are important to this market.
In terms of their economic outlook, Hispanics have a slightly more positive outlook about their personal economic situation than adults in general. 45% of Hispanics believe that they will be better off financially than they are now, in comparison with 41% of non-Hispanic adults and 43% of all adults. Their views on the US economy overall, however, are a little less positive than their peers. 21% of Hispanics believe that the American economy will be better off in the next 10 years, as compared with 24% of the US adult population. However, this does not seem to have totally throttled their purchasing plans. Hispanics are 16% more likely to say that they plan to purchase a big-ticket item in the next 12 months, with about 1.6 million Hispanics in that category and are slightly more likely (index: 114) to say that they plan to spend more on household essentials in the next 30 days compared with all adults (16% vs 14%).
When messaging Hispanics, language preferences play an important part. 35% of Hispanics say “when I hear a company advertise in Spanish, it makes me feel like they respect my heritage and want my business.” One-quarter of Hispanics say that they remember more about or pay more attention to products and services that are advertised in Spanish, and also that Spanish-language advertising is important because it is the best source of information for making purchases. This focused advertising brings results as well – one-third of Hispanics report being more loyal towards companies that show appreciation for the culture by advertising in Spanish.
Overall, the Hispanic market offers financial services institutions a valuable opportunity to understand and reach an underserved community, with messaging, media, products, and services that speak directly to the needs of this ever-increasing and valued group of American consumers.
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