Tapping A Market That Is Hot, Hot, Hot
When National City Corp. bank decided to roll out 78 new branches in Chicago two years ago, it went in knowing its market. With Hispanics expected to account for virtually all of the city's population growth over the next decade, the bank hired dozens of Spanish-speaking staffers and printed thousands of glossy pamphlets, hawking savings accounts to new immigrants and explaining the benefits of IRAs to more established Latinos. This year, the nation's 10th-largest bank will double its Hispanic marketing budget, targeting middle-class Latinos with direct mail offering mortgage financing and money-market accounts, all written en español. "A simple hello in Spanish," says Christian Sandoval, vice-president of Hispanic marketing at National City, "can open the door to a Hispanic better than a product with a 4.5% interest rate."
From Bank of America Corp. (BAC ) to Banco Popular, tapping into the growing Hispanic market is increasingly key for U.S. financial institutions. Indeed, U.S. banks may soon go on a shopping spree in search of smaller regional players with ties to Latino communities. They'd better hurry: Foreign banks such as Spain's Banco Bilbao Vizcaya Argentaria have already snapped up banks in Texas, California, and Florida. Now, predicts Jack M. W. Phelps, senior financial analyst for the the Federal Deposit Insurance Corp., "we'll see domestic banks buying small Hispanic-oriented banks to acquire their skills."
By now, the growing economic clout of the Hispanic community is well-known. So what's driving the banking push? For starters, it's the fact that relatively few Latinos have any kind of banking accounts. Fully 56% of the nation's 40 million Hispanics have never held a bank account, according to market researcher Simmons Inc.
That's a rich vein for banks to tap. With Hispanics' wealth and population rising three times faster than the U.S. average, the FDIC predicts that they will account for more than 50% of U.S. retail banking growth over the next decade. That amounts to more than $200 billion in new business, since U.S. retail banking revenues are projected to increase 44%, to $963 billion over the decade, according to Economy.com.
Those numbers have banks both big and small rapidly reshaping their marketing to get in on the boom. In California, Wells Fargo & Co. is redecorating its branches with Mexican themes. That helped spur holders of matricula consular, the Mexican ID cards often used by illegal immigrants, to open 700 new accounts per day last year. At Bank of America, Spanish-language advertising brought in 1 million new checking accounts from Hispanics last year -- fully 25% of the new accounts opened. And Banco Popular, a fast-growing bank based in Puerto Rico, now sends trucks that are outfitted with teller booths to U.S. construction sites so Latino laborers can deposit their checks directly into banking accounts. Wherever Latinos live and work, banks are not far behind.
By Brian Grow in Atlanta