It goes without saying that Hispanics should be proud of their heritage, as should we all, but does the good have to come with the bad when it comes to money management?
Despite being one of the largest populations in the United States, Latinos are one of the least trusting of banks and their services, but is this a generational issue so ingrained that it will take banks to fully understand the culture and address the problem at source before a solution can be found?
Latin American countries can be forgiven for being distrusting when it comes to their banking systems – such is their memory of financial crises and dramatic devaluations throughout the region, it stands to reason that people would steer well clear and opt for the money under the mattress alternative, living from month to month, relying on high commission paycheck loans and emergency cash to pay bills. The Global Financial Inclusion database ranks lack of trust in banks as the second most prevalent reason for not owning a bank account for Hispanic Americans.
A generation gap
Once in the US, older generations with limited English feel even more intimidated and are far less likely to place their money in the hands of the banking system, let alone create long-term financial goals or pay into a retirement scheme. As it stands, there are still an estimated 20 million Hispanic Americans who do not have a bank account, so it seems the apple hasn’t fallen too far from the tree in the case of many young Latinos.
With 60% of the Hispanic population under 35 years of age and 75% under 45, work needs to be done to put an end to this self-perpetuating problem, providing financial education to change this mentality and prevent it from being passed on to future generations, who will play a more important role than ever in the future of the country’s economy.
Economic inclusion is one of the most important elements of immigrant integration, so efforts need to be made to remedy this situation before real headway can be made within this section of the US community, one that come 2060 will account for a huge 1/3 of the US population.
Banking on the go
Latin Americans in the US are increasingly mobile, with 60% using their smartphones rather than computers to access the Web. Fintech companies are now beginning to target this important segment of society where they feel most comfortable, in a way they can understand.
Personal Finance tools such as MoneyMío have discovered this niche and are now tapping into this until now ‘undervalued’ market, offering intuitive banking services specifically targeted at the Latino customer. They are proving that they understand their specific situation and offer solutions in both English and Spanish, but most importantly, a language that they understand.
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