http://www.thestate.com/mld/thestate/ne ... 521202.htm

Posted on Fri, Sep. 15, 2006

Banks trying to attract Hispanics

By NOELLE PHILLIPS
nophillips@thestate.com

Palmetto Trust Federal Credit Union wanted Hispanic members so it began offering free check cashing to employees of a Mexican restaurant next door.

“We hope if they come to cash a check they’ll open an account and take out loans,” said Anya Little-Knight, manager of the Bush River Road branch.

So far, Hispanics are walking through the doors, but they’re not signing up for accounts, she said.

Palmetto Trust is not alone.

Financial institutions are struggling to make inroads into the state’s fastest-growing population that spends $3.5 billion in the state each year. To reach Hispanics, banks must earn the trust of illegal immigrants and of those who come from cultures where banking systems are different.

The USC Moore School of Business released an economic study of Mexican immigrants last March that found two-thirds of the population did not have bank accounts. Mexicans account for the largest segment of the state’s Hispanic population.

“The big news is not many have a bank account,” said Doug Woodward, the study’s author. “They’re holding money under the mattress. That’s going to change over time.”

This summer, the Census Bureau reported South Carolina has one of the fastest-growing Hispanic populations in the nation. Its latest data estimates 135,041 Hispanics live in South Carolina, a 42 percent increase since 2000. USC demographers who study the immigrant population estimate three to four times more Hispanics live here.

Banks and economics researchers have found several reasons why Hispanics have not opened bank accounts.

• In Woodward’s study, 59 percent of the 381 Mexicans interviewed said they never opened accounts because they do not have proper documentation.

• 12 percent said there wasn’t enough money to save

• 12 percent said they weren’t interested

• A 2002 report by the Pew Hispanic Center and the Multilateral Investment Fund found illegal Hispanic immigrants feared opening a bank account would expose them to authorities.

Clift Shealy, Palmetto Trust’s vice president, said Hispanics don’t trust financial institutions. That’s why the credit union called Agil Staff, an employment firm that places bilingual workers.

“Employing a Spanish-speaking teller has helped us a lot,” Shealy said.

Maria Morales, the teller, said she explains the advantages of the credit union to the Spanish-speaking customers who walk in. Many Hispanic immigrants come from countries where the banking system is not trusted, she said.

For example, in Brazil, Morales’ home country, the government once froze accounts to avoid a financial crisis.

“You have to build trust with the Spanish people. They just don’t give you their money,” Morales said. “When they realize people can be trusted and won’t take advantage of them, it will happen.”

Part of the problem in bringing Hispanics into the banking world is many don’t have money to put into savings.

Woodward’s survey reported S.C. Hispanics earn an average income of $20,190 — $10,000 less than the average resident.

On top of earning less, many send money home to relatives. After paying expenses in the United States, they have nothing to save.

In South Carolina, Hispanic immigrants send about $148 million home annually.

Even when a little money is left, it’s not enough to meet minimum balance requirements, the 2002 Pew study reported.

Palmetto Trust has a $25 minimum balance requirement, and it offers lower fees on money transfers than traditional wire services.

Morales tells customers about those things but, once again, the trust is missing.

“One of them looked at me like, ‘Are you sure they’re going to get it?’” she said of her pitch for the money transfer service.

Rodney Overby, executive vice president and chief information officer at S.C. Bank and Trust, said his bank has run into the trust problem, too. His bank has discovered Hispanic customers will use an ATM or telebanking before they will come inside a branch office.

In recent years, S.C. Bank and Trust has added Spanish to its ATMs, and it is building a Spanish online banking site.

As ATM use spreads across the globe, Overby said, more immigrants might be willing to set up accounts that relatives can access through money machines in their home countries.

Several S.C. Bank and Trust branches, especially along the coast, have bilingual employees. The bank does not have a bilingual employee in Columbia but is interested in recruiting one, said Sharon Moore, the retail banking manager.

At its branches without Spanish speakers, the bank uses a computer program where Spanish-speaking customers type a question and the words are translated into English for tellers, Moore said. They also refer to guides that have banking terminology in both languages.

Both Moore and Overby said the bank wants to build its Hispanic customer base.

“It’s amazing how much money the Hispanic population passes through and most of it is cash,” Overby said.

For now, the Hispanic community operates on a cash economy, Woodward said. That hasn’t been seen in the United States since the 1930s, and there’s lots to learn about economics among immigrants, he said.

Woodward has tried to convince local banks to fund further study on Hispanic finances but none has bought into the project. He is surprised.

“This is a new market for them, one they don’t understand and one with peculiar characteristics. It’s untapped, and it’s going to grow.”

Reach Phillips at (803) 771-8307.