the Search for New Customers, Start Here
James Ballentine, Director, ABA Housing & Community Development (reprinted
from the American Banker, August 1, 2003)
One group of potential new bank customers is growing
at the rate of about 1 million a year. They're not new babies or recent
college grads. They're America's immigrants, and nearly 3,000 arrive here
every day to join America's 33 million other immigrants who are making
America their home.
They're not just the customers of the future. For
banks that act strategically - and quickly - these are today's customers.
In fact, to ignore America's burgeoning immigrant population is to miss
a market opportunity that includes many men, women, children, families,
small business operators, skilled artisans, laborers, professionals and
many more who value home ownership and need banking services to help make
their dreams come true.
Combined with America's already considerable minority
population, these new Americans represent a still largely untapped source
of future customers. Consider these facts, for example:
- Immigrants are three times as likely as all U.S.
adults to rank buying a home as their number one priority
- Less than half (49 percent) of America's foreign-born
population actually own a home (compared to 74 percent of native non-minority
- At 39 million, Hispanics are now America's largest
- One large U.S. bank estimates that 80 percent
of its new customer growth in 10 years will come from the Hispanic population
How can bankers tap this growing market? How can
they attract new immigrant and minority customers? And how can they convert
them into lifelong customers?
To help bankers answer these questions, ABA has been
working with the Georgetown University Institute for the Study of International
Migration and the Development Training Institute. Through a series of
nationwide workshops and using specially developed resources, we are helping
bankers develop a comprehensive approach to this growing market.
To be truly successful in this marketplace, a bank
must rethink its traditional approach to marketing. In fact, successful
immigrant and minority outreach techniques go beyond mere marketing. While
it's not necessary to create a new department in the bank, or hire many
new people, it is essential that everyone from the CEO to customer service
representatives commit to the effort. You want skilled people who understand
the marketplace. You also want dedicated people who are going to make
A Six-Step Process
A good strategy for attracting and retaining immigrant
and minority customers is to follow the six-step plan worked out by ABA
and its immigrant marketing partners. These basic steps can work whether
you hope to attract new immigrants or want to work with existing minority
groups in the community.
- Understand the Market. Language, culture,
regional differences, race, religion and many other unique characteristics
help differentiate immigrant and minorities. Native Americans are not
Pacific Islanders. Asian Americans come from many nations. Hispanics
include people of many different characteristics, and from many countries.
Also, assess the size of the community you hope to reach. In other words,
know the marketplace you're dealing with. Understand its differences
and similarities. Identify those people in the community who you can
reasonably hope to serve. Be realistic about what the bank can and cannot
do with regard to staffing, additional resources and regulatory compliance.
Start small, if necessary.
- Build Infrastructure. The most important
decisions you will make involve recruiting and hiring the right people.
Your marketing and outreach team should reflect the ethnic makeup of
the new customers you hope to reach. Choose people who fit into your
organization's corporate culture and, where possible, find individuals
who are multilingual, who understand the cultural nuances of the marketplace
and who will be credible and trustworthy in the eyes of your new customers.
- Reach Out. These new customers may not
be familiar with the way banks work, or know what it takes to open a
checking account or get a loan. Build trust and establish credibility
with your new customers by helping them understand the financial basics.
A good outreach program incorporates education and information about
the basics of personal finance.
- Determine Creditworthiness. Standard underwriting
criteria may not work for consumers who are often paid in cash, don't
use credit, work several jobs and don't have a checking account. Look
for alternative ways to deliver banking services to these customers.
- Tailor Effective Products. Consider programs
that incorporate lower down payments or higher qualifying ratios. Don't
assume that your immigrant and minority customers possess traditional
credit histories. Look at government programs like those provided by
HUD, the government sponsored enterprises and others to help overcome
these initial barriers.
- Develop a Plan of Action. Establish organizational
goals that pull all of the resources of the bank together in serving
the immigrant and minority consumers you've identified. Track your progress
and measure success. Set realistic, long-term goals.
Obviously, the goal isn't just to sell banking products.
Not in the short run. Bankers need to build long lasting customer relationships
in the immigrant marketplace based on specially defined services, developed
trust and customer loyalty. In today's search for new customers, every
bank in America, big or small, should be taking steps now to reach out
to America's growing immigrant and minority populations. The banks that
are successful today in reaching this market will, themselves, be the
banks of the future.
James Ballentine is Director of ABA Housing &
Community Development. To find out more about how to develop a comprehensive
approach and infrastructure in the bank for reaching the immigrant market,
contact him at 1-800-BANKERS.