Financial Marketing: For Banks, Money Also Talks in Spanish
Up until now, the financial institutions of choice--or necessity--for many of the nation's 35 million Hispanics have been the sort of check-cashing storefronts that charge fees of as much as 20% to wire money back home. But that's changing. Banks and brokerage firms are scrambling to cater to this fast-growing group and to grab a slice of the $580 billion in purchasing power it controls. Marketing to the fast growing ethnic population "might be the single biggest opportunity for growth in the consumer space," says Kenneth D. Lewis, chief executive of Bank of America Corp. (BAC ) In early December, BofA paid $1.6 billion for a 24.9% stake in Mexico's Santander Central Hispano (STD ) as part of this broader strategy.
BofA is not alone. Multilingual ATMs, tellers, and phone reps are increasingly common. Wells Fargo & Co. (WFC ) and BB&T Corp. (BBT ) now accept Mexican ID cards from undocumented workers to open certain accounts. Citigroup (C ), which in May, 2001 paid $12.5 billion for Banamex, a leading Mexican bank, now offers a Banamex credit card in the U.S. Merrill Lynch & Co. (MER ) and FleetBoston Financial Corp.'s Quick & Reilly Inc. (FBF ), among others, are trying to attract Spanish-speaking brokers and customers.
It remains to be seen if this new marketing push makes long-term financial sense. Citibank suffered huge losses in Latin America in the 1980s following a severe Latin American debt crisis that required U.S. intervention. Past forays into Latin America by U.S. banks "haven't been great," says bank analyst Nancy Bush. This time, though, the action's at home.
By Dean Foust