By Lindsay Daniels, Manager, Wealth-Building Initiative, NCLR
Latinos have represented the fastest-growing segment of the U.S. population in recent decades. Significant growth is expected to continue—the Census Bureau estimates the Hispanic population will increase by 86 percent between 2015 and 2050, amounting to 119 million or one in four Americans, by 2060.
Given this tremendous population growth, the health of the U.S. economy is deeply tied to the status of Latino financial health. Access to safe, affordable, and cross-cultural financial products and services is essential for Latino individuals, families, and entrepreneurs to fully participate in the banking system.
Yet today, too few Latinos understand the banking system and have financial institutions they turn to for financial advice. Many Hispanic families lack access to safe and affordable credit or know their credit score, which often results in people seeking high-cost alternative financial services like check cashing or payday loans or relying on family and friends for financial help. Too much emphasis on technology without considering clients’ preferences leaves behind those who still rely on bank branches and have limited internet access.
These are the findings of a series recently published by NCLR. Profiles on Latinos and Banking takes a deeper dive into the data from the previously published report Banking in Color: New Findings on Financial Access for Low- to Moderate-Income Communities. The profiles, produced with support of the Ford Foundation and Citi Community Development, pay particular attention to how Latinos save, access credit, utilize banking technology, and the linkage between citizenship and participation in the financial sector.
Key findings include:
- Despite saving regularly, Latinos have a limited financial safety net. One in three respondents reported they had trouble paying bills or needed emergency cash during the past year.
- Several factors, including education, income, and language ability can affect access to and understanding of credit. For Latinos earning less than $30,000 per year, only 36 percent reported using a credit card, compared to 70 percent of those earning $50,000 or more.
- Technology has been viewed as a vehicle to increase access to and awareness of personal financial information. However, only one-fifth of survey respondents reported having used mobile banking.
- Citizenship is an asset that aids the integration of Latinos into the financial mainstream, yet many barriers exist that prevent noncitizens from fully participating in the system. Noncitizen Hispanics were less likely to own a bank account or save money than their citizen peers. Sixty-seven percent of noncitizens reported having a bank account, compared to 82 percent of citizen respondents. More than half (54%) of noncitizen respondents lacked a credit card compared to only 38% of citizen respondents.
These findings shed light on the barriers Latinos face to full financial access and inclusion. As Latinos and other communities of color grow, financial products and services must also expand and adapt to meet the needs of these consumers. Financial institutions must innovate with a goal of helping integrate new immigrants into the financial mainstream. Policymakers must examine and regulate high-cost and predatory financial products that strip wealth from communities of color. After all, there is a huge economic opportunity and benefit for both the public and private sector to better serve this rapidly expanding Latino market of the future.