Unique Challenges and Opportunities Serving Hispanic Credit Union Members (12/1/2015)

Monica Davy: Good afternoon, everyone. Thank you so much for joining us today for this very exciting discussion. Just one housekeeping matter, I would
just ask that everyone could make sure their phones are on silent or vibrate. We are recording the session. So my job today is just to welcome you here, and I would like to publicly thank our Chairman for supporting this event and for taking time out of her schedule to be with us today.
She’s going to welcome you and then turn it over to Bill. Chairman Matz: Thanks, Monica. Good afternoon, everyone. I’m Debbie Matz, Chairman of the National Credit Union Administration. Thank you for participating in this special event featuring a panel discussion on Unique Challenges and
Opportunities in Serving Hispanic Credit Union Members. This issue is extremely important to me. At NCUA we’ve made increasing diversity a top priority, because diversity makes NCUA a more effective regulator. This ultimately helps us achieve our mission of ensuring a safe and sound credit union system. Promoting greater
diversity and inclusion also makes good business sense for credit unions. We all know that credit unions are in the business of helping the communities in which they reside. We also know that credit unions are often the only source of affordable, insured financial services for many underserved and unbanked communities.
Understanding how to better serve diverse segments of your communities will allow you to reach these markets. This will ultimately strengthen your credit unions by building a more diverse and vibrant membership base. Today we are focusing on how credit unions can better serve the Hispanic community.
We have very compelling data to reinforce why this discussion is so important. The Hispanic population is our nation’s largest ethnic minority, with more than 55 million people. In fact, one of every six people living in the United States today is Hispanic. Over the next 40 years,
the U.S. Census Bureau projects our Hispanic population will more than double. Yet nearly half of Hispanics in the U.S. are either unbanked or underbanked, leaving them with fewer affordable options to meet their financial needs. As a result, a significant number of Hispanics use
non-traditional financing options, even in non-emergency situations. According to a study by the National Council of La Raza, one of every three Hispanics rely on family and friends for financial help. For those needing emergency funds, more than half of Hispanics have asked family
or friends for a loan. Research also indicates that noncitizens face even greater obstacles when trying to enter the financial mainstream. More than one of every three Hispanics in the U.S. were born in other countries. Many have found that understanding financial products in a
different language is a significant barrier to accessing financial services. During today’s discussion the panel will provide valuable information to increase the financial inclusion of Hispanics. This session will offer ideas on how your credit union can break down barriers to financial inclusion
and provide products and services to meet the needs of this growing population. NCUA is working toward similar goals. So before turning the discussion over to our moderator, I would like to tell you about what we are doing at NCUA to reach Hispanic consumers. Most of NCUA’s financial literacy tools are
available in both English and Spanish. This includes our Share Insurance Estimator, a wealth of information on our consumer website, MyCreditUnion. gov, and even our online youth games, World of Cents and Hit the Road. Our Consumer Assistance Center provides telephone assistance and handles consumer
complaints in both English and Spanish. And we provide outreach on consumer protection compliance issues to the Network of Latino Credit Unions and Professionals. To ensure NCUA’s workforce is more diverse and reflective of the Hispanic community we target Hispanic job
seekers at the same time we advertise NCUA jobs to all sources. In addition to posting all vacancy announcements on USAjobs. gov, we also post all job openings on a host of diverse websites including DiversityJobs. com, LatinoJobs. org,
AllBilingualJobs. com, AllHispanicJobs. com and LatPro. com. We also secured membership with DiversityJobs. com, which is an independent job board with a database of over 130,000 resumes from Hispanic, bilingual and multicultural professionals. Today, like you,
I hope to learn more about how we can be even more inclusive of the Hispanic community. We thank our panelists for sharing their expertise with us, and thank everyone in this room and on the live stream for participating with us. I will now turn the discussion over to our moderator, who is one
of our resident experts in financial inclusion, Bill Myers. Many of you know him. He’s the Director of NCUA’s Office of Small Credit Union Initiatives. Bill Myers: Thanks so much, Ms. Matz. It’s a pleasure to partner with the Office of Minority and Women Inclusion to expand our monthly webinar and
staff event to include this panel, Unique Challenges and Opportunities Serving Hispanic Credit Union Members. For note, this is the first NCUA event with real-time translation into Spanish and closed caption in both Spanish and English. It’s a 10-point dive. Our experienced panel is going
to discuss the match for credit unions in the Hispanic market. We will talk about the opportunities, the challenges and the solution in serving Hispanic members. Later in the event we’ll be reading your questions. So, please, if you’re watching our live stream, use the Submit a Question
box in the upper right of your screen. Those of you here in the room, each chair has an index card and a pen. If you have a question, hold up your hand and one of our staff will pick it up from you. On to our esteemed panel. To introduce them, on my left, Miriam De Dios,
the Chief Executive Officer of Coopera, a native of Jalisco, Mexico. Coopera is part of the Iowa Credit Union League and a CUNA partner. Their comprehensive approach to serving Hispanics has helped individual credit unions and credit union industry organizations to
position themselves for the long-term growth that is gained by serving Hispanics. Farther on the left, Bob Peterson, the CEO of One Source Federal Credit Union in El Paso and Las Cruces. My personal comment, Bob must have “involved” as his middle name. He has been on the Board of the
Cornerstone Credit Union League, the President of the Rotary Club of West El Paso, the Director of El Paso International Museum of Art, Director, El Paso Better Business Bureau, and actually his service includes being Board Chair of the credit union he now manages. Maria Martinez,
right on my right, the CEO of Border Federal Credit Union in Del Rio, Texas. Del Rio is noted for its Volunteer Income Tax Assistance program, its free financial counseling, its youth financial camp, and a unique qualification as an IRS Certified Acceptance Agent for ITINs, which
is relatively rare. She’s also the Co-Chair of the Network of Latino Credit Unions & Professionals, NLCUP, which we’ll talk about later. Sergio Osuna is our own. A native of El Paso, Texas, he began his career at NCUA immediately upon graduating university with an accounting degree.
He’s been an Examiner in Albuquerque, Lubbock, El Paso. He’s been a Problem Case Officer and now is a Supervisory Examiner in Phoenix, Arizona. But let’s start our discussion. Miriam, let’s begin with the opportunity for credit unions in the Hispanic market. Is it generally about the size of the market and
the growth, or are there other issues? Miriam De Dios: All right, well, thank you, Bill, and first of all, thank you, Chairman. Thank you for this great opportunity and for everyone at NCUA. I think it’s pretty significant for our movement. And in terms of the opportunity there’s tremendous opportunity, and I might reiterate some of the
Chairman’s comments, but we are the largest, fastest growing, youngest and one of the most financially untapped groups in the U.S. And so we are a sizable market, 55 million people, one in six U.S. residents. In addition to that, we are growing at a very fast pace, and in fact in the last decade the Hispanic market actually constituted
almost 60 percent of the overall population growth, pretty significant. A lot of that growth is also coming from the U.S. native population, the Hispanic population, that’s driving those growth rates up. We are very young, median age of 27, and in fact more than 15 million Hispanic Millennials reside in the U.S., which
is pretty significant in terms of reaching that younger member and lowering that average age of membership. We have over $1 trillion in purchasing power, and the kicker is that one out of two Hispanic individuals are unbanked or underbanked, meaning they don’t have a traditional financial institution relationship, or if
we do, we’re still largely using the alternative financial service providers – the check cashers, the money transfer shops, the buy here/pay here auto loans which my family used growing up. And if we look at the most significant segment of the Hispanic population, it is that untapped, unbanked and underbanked group.
And when we talk about financial inclusion, this is a community that is thirsty for financial services, may not be fully aware of all of the options. I come from an unbanked household. I didn’t become banked until I was a teenager, and that’s the time when my parents became banked, as well. And so
tremendous opportunity there to not only grow, because there’s certainly a very compelling business case for credit unions, but also to be reflective of the community, as the Chairman mentioned, not only from a membership level but at an employee level as well as a leadership level. Bill Myers: Thanks
so much. And I want to go on to the inevitable second question is, Sergio, what are the regulatory issues regarding serving Hispanic markets? It always comes up that what does NCUA think about this? There are field of membership issues. There’s the Customer Identification Program, the Bank Secrecy Act, and, as I mentioned before, Individual Taxpayer
Identification and ID issues altogether. Can you help us understand how NCUA approaches these issues? Sergio Osuna: I will do my best, Bill. Bill Myers: Thank you. Sergio Osuna: If I don’t touch on any subjects or any of the issues that you – just make sure you remind me. I’ve taken a few hits to the head here, so I can’t – I might not remember everything.
As far as bringing in Hispanic groups, it’s the same – a credit union faces the same issues as they would taking in any other group. The thing about the Hispanic community, especially the newer immigrants, tend to live in pretty well-defined areas, which makes it easier
for a credit union to identify that defined area and possibly bring that group in through as an underserved area. The best procedure to use would be to bring in the group as a census tract, again identified as an underserved area.
And the process for that is well established. Of course, the Board and management would have to make a decision on what areas to bring in, and we will do our best to help those credit unions bring the members. Again, once you bring those areas into the field of
membership that doesn’t mean that everybody’s going to come in the door. So later on in the discussion we’re going to talk a little bit more about that. Credit unions are going to have to work those areas to make sure that the members or the potential members actually come into the credit union and become members.
And, like I say, we’ll talk a little bit more about that. A multiple common bond credit union can bring in a census tract as an underserved area. However, that doesn’t mean that they’re going to be considered a low-income credit union automatically. You still have to go through the process of applying for that. Now,
we have a proposed rule, a proposed field of membership rule, which would make it easier to bring or less burdensome to bring in some of those groups. Our current rule requires that in order to bring an underserved area into the credit union’s field of membership the credit union has to establish a service facility
within that community within the first two years of being accepted. The proposed rule allows the service facility to actually be an interactive website that allows the acceptance of share deposits and loan applications. So that should make it a little bit less burdensome to bring in some of those
underserved areas. Again, it’s just a proposed rule. I know the Board is pushing for that, and hopefully it’ll go through and it’ll make it a little bit less burdensome, as I mentioned. You talked about the CIP. That’s the Customer Identification Program, which
is part of BSA. That’s something that we look at through the examination process. So we want to make sure that credit unions have the proper procedures in place, first and foremost the identification process. And of course when you bring
in citizens into your credit union you can take in the driver’s license. In most cases newer immigrants aren’t going to have those documents. However, a credit union can accept a passport with an ID, the matricula consular, which
is an ID card issued by the Mexican government in Mexican consulates, a permanent or a resident alien card. And there’s a couple of others that also can be taken in. Now, there’s the Individual Taxpayer Information
Number that can be issued to noncitizens. That’s not an ID. That plays a different role. But that’s not necessarily something that can be accepted as an ID for inclusion into the credit union. The ITIN, for short, does
play a vital role in ensuring that members – actually it’s a substitute for a Social Security number for noncitizens. So it does play a vital role in that you need an ITIN number, or an ITIN, to be eligible to be paid dividends. So that comes in handy
in that respect. And it wouldn’t hurt credit unions to apply through the IRS to be accepted, an acceptance agent, which means you can actually issue ITINs in your credit union. That would go a long way in establishing trust and relationships with the – especially
with the recent immigrants, but in general with the Hispanic community, as we’re going to talk a little bit more when we go on. Did I cover all that? Miriam De Dios: I might add, just to your comment about the CIP, I think sometimes we find that there’s a little bit of a misunderstanding with
the Customer Identification Program, because most credit unions have very flexible Customer Identification Programs that mention accepting a government-issued form of identification that has a verifiable number, all of those good things. But oftentimes we find the procedures don’t always align with the CIP, so that’s where it’s important
to look at the community, what is the makeup of the community? If you have a large immigrant base, then looking at things like matricula, the ITIN number and so forth, but oftentimes that creates a little bit of confusion. Bob Peterson: That’s a great point, because we know there is some confusion and maybe some inconsistencies
as to which documents are accepted and what forms of identification. And so one of the issues I see is trying to communicate some form of consistency across the credit union industry so that reduces the confusion among members and potential members, especially those coming from other countries. Maria Martinez:
And, you know, it’s very important to train your staff, because I think if your staff can buy into the idea of accepting different forms of ID it becomes easier, because a lot of the time you know you can accept it, but if you don’t train and inform the staff then it becomes really difficult, and when a person comes in they
reject them. They tell them, sorry, we can’t do it. So training is so important. Bill Myers: Thank you. I think in looking at this issue as we’ve discussed it there’s two separate issues. One is a compliance issue, or are you meeting the requirements of the law, which actually are a little bit thin. And part of the requirements of the law is figure it out yourself,
although there are some limits. But then the other side, which comes back to Sergio, is it a risk to the credit union? And in general it doesn’t mean could you lose some money, but would you lose enough money that our Share Insurance Fund would be in danger? And so our involvement in that steps back quite a bit. It’s not going to kill the credit union. It’s compliant
with the law. It’s your business. And so I think to your point, Bob, there are a lot of differentiated policies out here. There’s no uniformity. But maybe that’s a good thing, because credit unions are figuring that out for themselves. But let’s move on. I think one of the issues we address, Miriam, is how do you build
trust in this market? They’re unbanked. They’re unbanked for a reason. And part of that reason might be they don’t have a trusting relationship with a financial institution. Miriam De Dios: Right. I think that’s the Holy Grail question, right? How do you build trust with this community? And I think it’s important to clarify, first of all, what
segment within the community we’re talking about, because all Latino groups, all segments aren’t the same. We have varying ways of looking at segments. We have the unbanked and underbanked, which tend to be more first generation immigrants. We have Millennials. We have third and fourth and fifth and sixth generation Hispanics. Certainly a lot more
similarities than differences between those groups. But it is important to recognize that. And so the trust building is especially critical for that unbanked segment, that first generation, typically immigrant individual. And a few things are really important with trust building. It really
starts with having a genuine effort, having an organizational mentality of serving a new community that’s bought into by all levels of the organization. And this is especially critical in parts of the country where the Hispanic population may not be the majority yet. And so this
may be a new concept for a Board and for leadership, and so having that buy-in and translating that into a genuine effort, being welcoming of the community. So, growing up I can tell you my family came from Mexico, and in Mexico, as is the case in a lot of Latin American countries, for example, you have banks
and you have credit unions. Banks generally tend to cater to the wealthy. And so my family was used to dealing in cash, something they were comfortable doing when they came to the country and continued to do. And a lot of their friends were cashing checks again, buying money orders to pay bills, using all of those alternative
financial service providers. And they went to them because they were pretty convenient. They were often open around the clock. They asked little questions, or few questions, upon using their services. And they also had Spanish-speaking personnel. So if we think about what makes somebody feel comfortable, those are some of the things
to start to look at in terms of building trust. And one more point in terms of building trust, it’s important to really be able to serve the entire family unit, regardless of immigration status, regardless of the type of identification that the individual may have, and we can do this regulatorily, and, of course, every credit union
is going to be a little bit different, but also regardless of the language preference of the individual. Because, for example, if I go into a financial institution, to a credit union, and you open an account for me, however, if my parents come in and you don’t open an account for them I can tell you I’m not going to keep that relationship very long with you. And this
is a very loyal market, as well, so that’ll make a big impression. Bob Peterson: Let me add to that, Bill. Bill Myers: Yes. Bob Peterson: It kind of strikes home with me, because living in El Paso, and Sergio, really, as well, we have 82 percent of our population is Hispanic. We have an inordinately high percentage of
multifamily households in El Paso. To Miriam’s point, we see these multiple-family units coming to us to open accounts and even to arrange for an auto loan, for example, because of that dynamic. In the multiple-family households it’s really important that you do serve all of them, because there’s a bonding
there, and it’s really your opportunity as a credit union to bond with that family. I know that sounds high sounding, but it’s really true. You have a great opportunity when you’re faced with that kind of situation. Bill Myers: So members come in multiples. That’s great. So, Maria, we started to talk about some of the communication
issues. Can you talk about the Spanish language and the necessity of Spanish-speaking staff? Maria Martinez: First of all, when a person walks in and all they speak is Spanish or they prefer to speak Spanish, they feel more comfortable when they can speak to somebody that knows their language. So I think it’s very
important that if you’re going to advertise that you have services in Spanish and you have literature in Spanish, it’s very important that you also have staff that are going to attend to those people that are going to walk in. Sometimes I know I’ve talked to other credit union CEOs and they tell me, well, in my neighborhood
there’s no Spanish-speaking people. But there is a Spanish-speaking community in the area. However, I cannot recruit people like that. Well, why don’t you establish a class, have training for your staff? Bring in a professor from the local college and teach your staff so that they can know the language. The
other thing that is really nice is – and a lot of times I do it – I go shopping and I look at somebody that knows the language and I recruit them. You give them your card. Hey, if you’re interested in a job, and if they are nice to the people, you recruit them right there on the spot. You have to get creative with recruiting, and
that’s one thing that we do very well. They laugh at me, because they say, Maria, you recruit even at the bars. I say, well, I’m not at the bars. I’m not a big drinker, but I go out there and I try to recruit people. But you’d be surprised the people that you meet at community events. You go to the community events and you can recruit people
there, people that are very involved with the community. Those are the people that you want to bring in into your credit union, because they know the culture. And yesterday we were kind of rehearsing this, and one of the things that came up is the cultural part of it. You have to know the culture. Yes, I know
sometimes for some people it’s a culture shock when you go into a vicinity where you maybe prefer not to be accepted or you don’t want to be accepted. But I think it’s so important that you know the culture when you’re going to serve these people. One of the other things is that, for instance, if you have a core system where
you can identify what language that person speaks, and I’m not only talking in Spanish but any other language, if you can identify that and the person prefers to speak that language, then why don’t you put it on the screen, so that the next time the person comes your teller knows how to attend to that person? So we just converted into a new
system, and that’s one of the things that we have, that we can identify the language, so I’m so excited about it, because we didn’t have that before. But speak Spanish. That’s the main thing. Miriam De Dios: Can I add one thing to that? I think in terms of identifying the language, that’s critical. And I would also point out that if you’re not ready to
provide all services in Spanish when you’re asking that question to be cautious, because if you’re asking me what my language preference is, then I’m going to expect to want to speak to someone in Spanish when I call in, or when I access mobile banking I’m going to want that in Spanish. So I would be cautious of when to do that, but definitely
examine that entire membership experience for the language. Bill Myers: Thanks. Well, Maria, I’m going to keep you away from my staff. I want to keep them with me. But one of the roles in this field is the roles of association and assisting credit unions again in this area. We’ve already talked about
NLCUP a little bit, and, of course, Coopera, but we haven’t talked about designations like Juntos Avanzamos, and they’re bringing relevance to the role of credit unions. Bob, could you talk about that a bit? Bob Peterson: Let me start for those of us either online or here in the room who aren’t familiar with the Juntos Avanzamos
designation. We created this in what was then the Texas Credit Union League, now Cornerstone Credit Union League, in order to address our Hispanic population, and, again, reflecting the growth of those populations, the growth of those communities and their relevance to credit unions. So what Juntos Avanzamos designation
does is it asks a credit union who is interested to basically fill out a form to testify that we have a number of employees, predominantly multilingual. They are multicultural. We have tests for the number of Hispanic employees in the group, what the community makeup is
in terms of demographics, what percentage of Hispanics, as I mentioned the 82 percent in El Paso. One Source was one of the early achievers of the Juntos Avanzamos designation. But what we do is we have a committee which looks at these applications and determines whether that
credit union really deserves this designation as a Juntos Avanzamos institution. There are about 40 of them around the country. Recently we opened that designation up to outside of the Cornerstone Credit Union League, which is Texas, Oklahoma and Arkansas, and we immediately felt a rush of applications
from credit unions around the country, as far away as Washington State. We have one pending in Maryland. Miriam reminded me yesterday that we do work in Iowa, and that there’s a significant Hispanic population there. So it’s not something that’s limited to what we thought initially, and that was that it was going to be a border thing or a Texas
thing when we’re dealing with the Hispanic population. It’s just not true. We know there are significant Hispanic populations everywhere around the country, and we’re learning that just from the applications we’re getting for the Juntos Avanzamos designation. In terms of relevance, this designation, in our view, one of the reasons we
created it was that it demonstrates to our Hispanic communities and Hispanic members the commitment that credit unions have to serving those communities, and I think that’s very important. To kind of turn that around, really the relevance is demonstrated in that commitment, as
well. So we use Juntos Avanzamos as a way to attract membership and to reconfirm with our existing Hispanic members our willingness and desire to serve those populations. We use it also to reach out a little bit further into generational things. Miriam
has mentioned the – we realize that there is, at least in El Paso and I know around these other communities, that we have first generation to seventh and eighth generations. My wife is, I think, a 28th generation Hispanic, whatever. And
so we’re trying to address those issues as well, the multigenerational issues, as well, with this Juntos Avanzamos designation and how we administer that both in the Cornerstone League and now, with the help of the Federation of Community Development Credit Unions, who are
administering this on a national basis, we’re making some real good inroads into the Hispanic population. And that in itself, to your question, really creates that relevance, and it will be a strong driver going forward, I think, for credit unions and the Hispanic populations. Bill Myers: Thanks, Bob. I want to take a moment,
maybe, to say if you wouldn’t mind a word about NLCUP. You have an event coming up in conjunction with GAC? Maria Martinez: A few years back one of the things that we did, a group of many Latino credit union employees, we got together and we said we need to develop a networking organization that
we can use to just kind of get together and also to help some of the credit union employees go and be promoted within the credit union industry, especially if they were Hispanics. So we got this network together, and it’s called the Network of Latino Credit Unions and Professionals. NLCUP is the
abbreviation. And every year during GAC we host an event. It’s a networking event. We invite people to attend. It’s a free event. It’s coming up in February during GAC. It’s going to be on Tuesday the 23rd. And if you give us your emails we can send you an invitation and you can join us. And a lot of the times what happens
is you go there to network. Some of the attendees are not Hispanic. And, no, you don’t have to be Hispanic. One of the ideas of the network is to build a relationship so that you can identify the needs of the Hispanics in your communities. I have a firm belief that credit unions are the answer to Hispanics. They are.
And if we’re not taking advantage of that, then we’re going to lose them. We’re going to lose them to another institution, to the payday lenders. And we don’t want that. So, therefore, NLCUP was created for that so that we could develop people within the credit union industry. And I think it’s been really helpful. I know talking to
Chairman Matz one of the things is they develop programs so that credit union employees can prosper within the credit union industry. And that was the whole intent of this, of the NLCUP group, to get everybody together to understand what the Hispanic needs are and also to build and promote from within those people that you can
have, or even steal some NCUA examiners away and put them in credit unions, especially if they’re bilingual. But, no, I’m not stealing anybody today. But I think it’s important that we network. And I would invite you all to come and join us so that you can be better informed. During the event we try to bring guest speakers,
and we also try to invite some of the congressmen. So we’ve had a couple of the congressmen. I know I’ve had some from my area, from the El Paso area, and they’ve been there to give us just some input on what is it that is affecting the Hispanic community. Bob Peterson: To take nothing away from NLCUP, because that’s an important organization,
I believe, and I’ve been to some of your receptions, they are really good events, but we can’t lose sight of all those relationships that we have within our communities. If we do we lose. I’m talking about the Hispanic Chambers of Commerce, NLCUP, all those Hispanic groups, Latino/Latina groups that we should interface with
on a regular basis, especially in those communities where we’ve identified significant Hispanic populations. We really have to reach out to them. In El Paso we’re members of numerous organizations like that, and we think that’s very important to maintain the communication with those communities through those organizations. Maria Martinez:
And if there’s not one in your community start one. Get one of your employees, your marketing person, to start an organization. I think it’s good. One of the things that we just recently did, we started a young professional group within my credit union, and it’s made up of anybody that is under 35 years of age, which I barely
made it, so I’m in it, too, but I’m the leader. But one of the things is I want to promote this to the youth, to the youngsters out there, because they’re the ones that are going to follow our footsteps. And if you can build this into them you can promote it from within, and then they go out there and they do community
events also. Bill Myers: So I know Miriam is too modest to say a word about her organization, so I’ll say a couple of words about Coopera, which is an important organization promoting Hispanic service in our community. Really they have a consulting program with a minor and a major role. The minor role would be identifying the Hispanic market for
credit unions and helping them understand the market that they’re trying to serve, and then, secondly, to go further and help them develop a strategic plan, the products that go along with it. It’s an important role inside credit union development in this area. Bob Peterson: This is not a shameless endorsement, but I’ll second that. Coopera
was a big help to us in developing the structure of the Juntos Avanzamos designation, and that was very important to us. Now, we’ve kind of trimmed that down and made it easier for people to apply, but Coopera’s input was really important to us going back to Warren’s time, with the founder of Coopera.
And so Coopera really is an example, and, again, this is not a commercial, but it’s an example of really understanding organizations, those organizations that understand, I mean, the need for communicating with the Hispanic communities and our Hispanic populations. And we really need those. We need
to reach out through those organizations, again, NLCUP, Coopera, those others in our communities. Maria Martinez: One of the products I know that we use, but I know they don’t want to – well, I’m going to bring it up, because I think it’s a great tool for credit unions. Even if you don’t want to do anything else on your website, there is one that they
have, it’s called El Poder es Tuyo. And it’s something that you can put and you can link it on your website, and then your members that are Spanish speaking, they can at least get a feel of what’s involved in the financial industry within credit unions. And it’s a great service. I mean, it’s not very expensive, either, and I’m sure she can give you
a discount today if you sign up for it. You owe me for that. But at least it’s a tool that you can use within your website and promote to the Hispanics. If you don’t have anything else there’s a choice there. Bill Myers: So we’ll call this the end of the shameless promotion part of the webinar. But, Maria, we’ve
talked about reaching out to a specific audience and targeting that audience. Let’s talk more about that and about the relationships you need to make that work. Maria Martinez: Hispanics, they have this – they want this high-level service, and when they walk into your credit union they want to be treated
as a person, first of all, and we all want to be treated as a person. But they also, they bring with them all their relatives and all their compadres and all their family, anybody that’s around them. We noticed this when we established the VITA program, the Volunteer Income Tax Program. At first they would walk in,
hey, can you do my income taxes? And then they would say how much do I owe you? And you would say it’s free. Because they were so used to paying that in our community. So we started doing their income taxes, and they would say – they would ask us like two or three times, are you sure it’s free? Yes, it’s free. Well, later on they would come back like with five or
six compadres. They would bring all the neighborhood, because they wanted us to do their income taxes. I think it’s a cultural thing. They feel comfortable with you, they’re going to bring you their business. The VITA program, when we implemented that, it was more like a community service, a free service that we joined in with the IRS, but it’s
become such a great tool for us to recruit people into the credit union members. It’s just you’ve got to know how to treat the person so that they can bring others with them. And they’ll bring their kids. I know you had mentioned, Miriam, that if you have an account and your parents have an account they’ll come and open an account with you.
So you’ve got to look for those tools that will bring those people in, not just them but their families. And a lot of the times they’ll come with their kids. So now you need the youth accounts also, because the kids are the ones that are translating for them. So the kids, they know both languages, but the person does not know English, so they bring the kids. So now
you can cross-sell them, cross-sell them the debit card for college, cross-sell them other tools that you have within the credit union. And they like that. They feel comfortable with it. Miriam De Dios: I would say that at the end of the day, I mean, Latinos are interested in all of our products and services at the credit union. And certainly there’s segments where some products
are going to be a little bit more attractive initially. So we go back to the unbanked, that first generation group, they’re going to look at some of the remittances. They’re going to look at prepaid reloadable cards. They’re going to look at specialized savings programs for immigration expenses, potentially, or for quinceañeras. But at the end of the day we all want to
achieve that American dream and own that home and get that car, and those services all will come in handy at some point in time. Maria Martinez: And know the holidays. Know that Mother’s Day in Mexico is like a big thing. Everybody buys a gift for mom. So if you do like a special promotion do it for Mother’s Day. Here you probably
wouldn’t think anything for Mother’s Day, but Mother’s Day might be a big event for them, and then they come and borrow money. They want to buy mom that big TV that she wants, well, then, do the promotion for Mother’s Day. And remittance services, too, that comes in handy, too. Bob Peterson: The first time I saw someone
spend in excess of $20,000 on a quinceañera I knew there was an opportunity there in that market. And so it’s quinceañeras, it’s cumpleaños, it’s bodas, it’s a whole multitude of things, to that point. We went so far also as to, and talking about relationships and selling upfront, we had an arrangement with the
consulate in El Paso, and the Consul General there said come in and tell your story. If it can help people coming in to apply for immigrant status and to become legal, then we’d love to have you in our lobby showing these people how the financial system in the United States works, and we got first crack
at it, and we made some new members that way. And we got members who understood early on what the financial system was in the United States and how it worked. It was very rewarding for us. Sergio Osuna: And providing financial services to address special events like quinceañeras and things like that, it goes a long
way in building relationships. And when you build that relationship it doesn’t stop – we’re a tight-knit community, so when you build a relationship with the initial member, it doesn’t stop there. It’ll spread to friends and family, the compadres, and the kids,
which is really important, because then you’ve actually hooked a subsequent generation. We don’t forget when somebody helped out our parents, and we become loyal to the, in this case, financial institution. And that’ll keep us coming back, and that’ll
keep our kids. We’ll make sure that our kids continue to access financial services through that credit union, which we hope will be the case. So, again, building those relationships, it’s going to go a long way. It’s going to last for generations. And that’s something to keep in mind when determining what services you’re going to offer to your
members. Maria Martinez: And they’re very appreciative, too. They’ll bring you tamales and they’ll bring you food because you helped them. I mean, they’re very appreciative. I’m surprised I’m not even bigger, because they’re always bringing stuff to eat around there. Bill Myers: Sergio, I’d like to move from our product-based services to member
education, which I know is one of your favorites. So let’s talk about the role of non-product services could play in this market. Sergio Osuna: Well, I believe education is paramount in making inroads into the Hispanic community. And credit union Boards and management need to take a
two-pronged approach. The first part is educating staff. When we talk about education, we always for some reason talk about the membership. And that’s important. But the first step in making this work is going to be to educate your staff, and, as Maria mentioned, training about how to treat
the different culture, which a lot of times we think because somebody’s bilingual that they understand, that they can successfully communicate with the culture, and that’s not necessarily the case. There’s many subcultures within the Hispanic culture. So your staff needs to be fully aware
of that. And they need to be educated in how to treat the different cultures with respect, which goes a long way. They need to be educated as far as the documentation that’s necessary, again, to establish membership within the credit union, and a plethora of other
things. Now, the second part is to educate your potential membership, your potential members and your existing members, as well. Now, many credit unions offer educational programs. That doesn’t mean that your members or potential members are always going to take advantage of them. So credit
unions need to establish relationship with community groups out there, and establish strong relationships and participate in their programs, wherein the credit union can actually provide educational services to potential members. And that’s going to go a long way in bringing people in, providing education
as far as the services that the credit union offers, such as loans, which of course is very important and every credit union wants, things that we don’t normally think about. When somebody, a recent immigrant wants to establish a pathway toward citizenship, it’s not a free process. It can get
very costly. So being able to offer loans for things like that is going to go a long way. And, again, it establishes a relationship with the member and it establishes trust and loyalty. Providing education as far as the importance of
establishing an ITIN, an Individual Taxpayer Identification Number, that’s going to go a long way. One of the primary things that sometimes we tend to take for granted is maybe some of your potential members don’t know how to become a
member of the credit union, so providing information as far as that goes, or education as far as that goes, is also going to go a long way. So providing education on both sides, your employees and your members, is going to go a long way towards bringing
in those potential members and tapping into the Hispanic market, which is, on the business side, has the potential to be very profitable, but on the credit union helping – from the credit union helping people aspect it’s going to go a long way in helping
the Hispanic community advance. Bob Peterson: To maybe pump that a little bit more, Sergio, I agree with everything that you’ve said. The salient point from my perspective is that communication is really ultimately the key to this thing.
Providing that financial literacy is key to credit unions and our success, but it’s not just for the front-line people. I think there’s maybe a misconception here. You have to have all your tellers be bilingual. Well, it goes from your receptionist through your
tellers, your member service officers, through your executive team. Everybody needs to be on the same, or in the same ballpark with understanding all of those dynamics of serving our members, and especially our Hispanic members and our Latino communities. It’s very important that everybody’s on the same page. Sergio Osuna: I agree
wholeheartedly. It starts with the Board. It starts with the Board. The Board needs to fully understand the importance of bringing in an untapped market. And they’re the ones that are going to have to establish the buy-in for the rest of the management team and for staff. So, yes, I agree. It’s at every level. It’s not just the tellers. The tellers are the front-line people
and they’re very important. Don’t want to diminish their importance. But it has to start at the top if it’s going to be successful. Bob Peterson: Parenthetically, the Board including the components of that Board, the makeup of that Board and make it appropriate and reflective of the demographics of those communities we serve. Maria
Martinez: I think if your Board understands the potential of serving the Hispanics your Board will accept you serving Hispanics. Because sometimes I know I’ve spoken to other CEOs, and they say, well, my Board really doesn’t want to go for that. But really, I mean, the potential is there. Somebody’s grabbing them. Somebody else is
grabbing them. If you’re not doing it, somebody else is going to do it within your community, because it has to be done. Sergio Osuna: And that’s also very important. One of the issues that comes up when we’re talking about the Hispanic community is payday lenders. Payday lenders, they’re the ones that are grabbing them, because sometimes they just don’t
know any better. So that needs to be part of your financial literacy education is talking to potential members. Again, once you get them in the door, then you can establish a stronger relationship, but talking to them about the importance of staying away from that type of lending transaction, and,
again, possibly offering your own payday type of loan in order to get them from that trap, get them away from that trap. So, yes, education, like I say, is paramount. Miriam De Dios: One additional thing I would underscore on the member education piece is that there’s a lot of topics that we probably all take for granted
and know very well, because we’re very much a part of the financial mainstream. But, as Sergio has mentioned and others have mentioned, there are some things that aren’t very well known to someone who is unbanked, for example, how to build credit. I mean, I would stress definitely talking about that, what that entails, how to build good credit over time, the
bad uses of a credit card, for example. Sometimes there’s a misconception that that’s the only way to build credit. That credit union difference, really understanding what is different about a credit union versus alternative financial service providers versus banks. And when you work with other partners in the community you also build
trust with the community that way. So going back to that trust question, you can actually transfer over some of that trust that some of these Hispanic-serving organizations have already built with the community by partnering together, and now they see that you are a part of the community and that can be a little bit easier over time. Bob Peterson:
Just the importance of those relationships, we keep circling back to that because it’s so critical to us. As an example, several months ago I was approached by a group in Las Cruces, in our Las Cruces branch. They were intrigued by our Stretch Pay option, because they brought us, this group with whom we have a relationship,
brought us statistics from that community, and those statistics were sobering, to say the least. Average payday lender was getting 340 percent APR. People in that community had borrowed $17 million from payday lenders and had repaid $35 million. Those are just astounding numbers and something
we should be doing something about. And so we’re working now with this community group to try to ameliorate that situation and educate people in that community and our potential members about the dangers of payday lending and the alternative that credit unions can provide. I think that’s important. And, again, it
demonstrates the importance of those relationships when they came to us with these really, really pertinent details. Bill Myers: So, let’s dig a little bit deeper into the – outside of the member education into the actual product responses that credit unions offer. And, Maria, starting with you, and I know everybody has an opinion about this, which are
the product strategies that seem to be successful in this market? Maria Martinez: We have a financial counseling program. When we first started the financial counseling program it was to build our first-time homebuyers. And that has developed more into a budgeting financial counseling, where we bring in members, and we do it on a
one-on-one basis. And we also do workshops. We go into some of the communities. And we have also an affiliation with the Mexican consulate. So through them they allow us to go and do workshops through them. They do health fairs. Every year they host at least one or two health fairs, and we join them and do those health
fairs with them, and we provide financial counseling with them. And we sign up a lot of them. We’re one of the few free financial counseling agencies in our community, so that helps us a lot, because they can come in and they don’t have to be members. We do it for members and nonmembers. But eventually they become members, after we help them. And we help them with
their credit report. That’s very important. The VITA program has been another one that has been very successful in our community, and with that we’ve been able to build really good relationships. And one of the ones that we really haven’t touched on, and I know before the Juntos Avanzamos program, when the League created an international committee, and,
Bob, I think you were in it, too, we were looking at remittances as one of the hooks into bringing the Hispanics into our credit unions. With the remittance program, at that time we were very limited on where we could send remittances to in Mexico or other countries. And at that point they had a lot of like the
pharmacies in Mexico that would accept some of those remittances. Well, things have evolved, and through the Federal Reserve Bank, through their ACH program, then we had the Directo a Mexico, which is what we use at the credit union right now. But we are on beta test with a new program, and I’m
very excited about this. It’s called WalletOn, and in Spanish it’s WalletOn, so it sounds like really strong. And with that everybody in Mexico and in other Latin American countries, mostly everybody carries cell phones. A lot of people don’t have a phone in their house, but they carry cell phones. With this
here it’s a smartphone option where they’ll be able to come into the credit union, we identify them, we set up an account for them, we set them up on this program, on this WalletOn program, and they will be able to transfer funds and translate funds directly into somebody else via a phone. And the person on the other
side, they would have established an account at a financial institution in Mexico, which we’ve already covered the CIP and the BSA and OFAC, all that. Once you carry all the compliance stuff, then you can create a product that you can use. I’m very excited about this product, and I’m hoping that we can launch it. We’re on
beta test. And if this works out for us I’m sure you’re going to be hearing more about this, because we’re very excited. And I think remittances, as you know, for a while there back in 2008, 2009 people were not sending as much money overseas because there were limitations. But now it’s picking up. I get a report from Mexico
every time, and those remittances just keep going up and up and up. And if we can provide that service at a low cost to our members they’re going to be really happy, and especially if they can have it on their phone and they can check their balance. And then you can load, you can preload, and then you can advance funds to them. That way you don’t have to send
them all at once, because then once you send it there it’s gone. But you can say okay, I’m going to send you $50 so you can pay the rent, and then next week another $50. So you can program it. So we’re very excited about that program on the remittances. Bob Peterson: That’s an example where relationships stretch outside of the domestic markets, because we’re just actually
reemerging with a relationship with (inaudible) Popular Americana in Mexico, and it was the early meetings with them in Leone years ago that really led to some of the drop in the cost to send remesas, to do remesas or remittances to Mexico. We really forced some of those providers to lower their rates. Even if they’re not credit unions, they were
forced to lower their rates in order to stay competitive and continue to do those remesas. Miriam De Dios: I think what’s a great thing about products is that you can also adapt and repackage a lot of the products that you already have today. Now, certainly there’s a lot of maybe newer transaction-based products, but when you look at lending, credit unions already provide
great loans, and it’s looking at how to offer those small-dollar personal credit-building loans that are going to be attractive for this untapped market. It’s looking at things like safety deposit boxes. I was talking to a credit union in Colorado, and they mentioned they’re actually selling quite a few safety deposit boxes because they work with a lot of families that
don’t have a place to put some of their legal documentation from Mexico that they carry with them on their properties or whatever it might be. So don’t forget about what you already have and repackaging them, those products, and looking at how to make them relevant to the community. Another big one which we touched on briefly was immigration loans. I mean, there’s a
tremendous opportunity right now for financial inclusion with folks that are going through the immigration process. I went through that process myself. It took about 10 years for me to become a naturalized U.S. citizen. And there were three people in my family that went through that process at the same time. So that meant thousands of dollars were spent on
application fees, at times working with attorneys, working with community organizations to go through that very complicated, time-consuming process that’s also very expensive, as Sergio mentioned before. You have folks that right now are eligible to qualify for DACA, the Deferred Action for Childhood Arrivals, which is a
program that allows young undocumented individuals to be deferred from deportation. They can get a work authorization, a Social Security number. And these are young people that are interested in furthering their education. They want to open accounts. They want to own homes and buy cars. And for some the fee
is preventing them from applying for these programs. So with that particular program it’s upwards of $400, but, again, if you have multiple people in a family going through that, it can be very expensive. And so here’s where credit unions can partner with organizations to cross-promote those products and to repackage what you already
have and make it resonate with the community. Bill Myers: Bob, I think we’re talking about products here. Bob Peterson: We are, we are. Bill Myers: And we’ve talked about targeted products, and we’ve talked about – Miriam just talked about using your current products and repackaging them. But I’d like to talk more about
assimilated products. What is a – where do you end this, and how – CDs, for instance, how do you end up in a standard product set? Bob Peterson: Well, it doesn’t end. Really, you have to look at a continuum here that says as the markets change you have to be ready to change your product set, you
have to be ready to discontinue products, to introduce new products, to be innovative. The trick that we see with the Hispanic markets is this, talking about generational again. There are generations in the Hispanic markets who want the standard product offerings that we’ve done for years and years. They want just a standard checking account.
They want the credit card. They want a debit card. They understand those things. Okay, and then just leave me alone. I’m happy with all that. Then there are the younger generations, the Millennials and those who have different standards, and they want different products. And so the challenge for credit unions is to overlay those innovative products
on the existing products and make them relevant and applicable to your whole Hispanic population in addition to those non-Hispanic populations. So the ultimate here is that you have a suite of products in your credit union that addresses the needs of all your members and does so, obviously, in an efficient and businesslike
manner so that you don’t lose money providing these. And that’s why you have to look regularly at products that aren’t relevant anymore and just get rid of them. But, so it’s assimilation of those new products, to specifically look at Hispanic needs, with those standard products that have been in your credit union
for a number of years or even decades. One example is we stumbled across a year or so ago and now we offer it is something called eMoneyPool. Those of you in the Hispanic communities will know the concept of tandas. It’s been around for centuries. It’s pools that were done in the neighborhoods, essentially. Ten people
get together and say let’s each save $50 every paycheck and then we’ll dole it out to people who need those monies. Well, now there’s an innovation that basically has taken the same concept, made it electronic using the cloud and social media, so that you can do this online. You remove much of the risk
that was inherent in those neighborhood tandas, if you will, and made it accessible to whoever. I mean, I tested this, got in one of these pools, and there were people from across the country doing this. Darned if it didn’t work, and it was quite something. So what we’re
looking for is, to take that one step further, is to take the concept of the eMoneyPool, let that demonstrate an individual’s, especially a new member’s discipline in savings, and then use the administrators of that eMoneyPool as a resource to – as a testament to this person has shown the discipline,
we think you need to consider them now as a legitimate borrower. Offer them a signature loan. They’ve proved their worthiness. They understand how to create and build a credit score. They will become better members for having experienced this eMoneyPool. And so I think that’s probably a good example
of how you assimilate those new products and services that we can offer now electronically and technologically with those that have been traditionally in our communities for long, long periods of time. Maria Martinez: The other thing, I know Sergio had brought up the idea about the ITINs, which
is the Individual Taxpayer Identification Number. And with that, once the nonresident has established an ITIN, then you can also let them borrow so that they can build up credit. And with that you comply with IRS regulations and then you also allow the person to start borrowing with you.
And they become great payers, because they feel that they are under the eye. So they want to build a good relationship with the credit union. And we are an acceptance agent at the credit union, so you can certify for that through the IRS. And I don’t believe there’s much of a cost for that. And it’s a
good thing to have. If you look around your neighborhoods a lot of the times you may notice that there’s not an acceptance agent within your vicinity. I know we’re the only ones within a 140-mile radius. And so for us it’s really nice, because we cover that area and people can come in and get their ITINs with us.
So you may want to look into that. It’s not very hard to do it. You just have to certify a couple of your employees to do that. And then you can offer loans to nonresidents also. Bob Peterson: One of the themes we keep hearing is that, and everybody’s hit on it, is that it’s very important to – and I have a marketing background, so I learned this early on
in my career – it’s very important that you listen to the communities. We can sit here all day long and say – I can say, well, eMoneyPool’s a great product. But, listen, if there’s nobody out there that wants eMoneyPool then it’s futile to offer it. So the trick is to listen to our members, understand what they’re asking for, and even if they aren’t asking for it, understand what their
needs are and then address those needs for the products. You can’t go wrong if there’s a bona fide need in your community and you’re willing to offer that product at a reasonable rate and for a reasonable purpose. Miriam De Dios: And a couple of ways to actually listen to the community, a couple of best practices, would be to hold focus groups, for example. Go out
into the community. Talk to individuals, potential members, and see what are their financial needs. Also, form what we call an external Hispanic advisory group. Reach out to some of the leaders in the community. Meet with them on a regular basis. Use them as a sounding board. And let them know about the positions that you have available for bilingual, bicultural staff.
You might find that you may develop some individuals that might be interested in a Board position down the road. So a couple of great ways to stay connected and to bring constant feedback about the needs in the community. Bob Peterson: I can’t resist relating a story I’ve related a number of times over the years, but when we formed the original Texas Credit Union Foundation we reached out (inaudible) groups and
focus groups, and we reached out to young people about what they needed. They didn’t know anything about financial literacy. They didn’t know about money. So we went to their parents, and their parents said we can’t teach them, because we don’t know enough. So we went to the schools, and the schools said if it’s not tested it’s not taught. So who was left swinging in the wind? It was those young
people. We got answers like when we asked them, on tape, we asked if you had so much debt you couldn’t pay it back, what would you do? The answer? I’d get a credit card. That would solve it. Those are the kinds of things if you listen – we decided we needed to focus on financial literacy in that foundation, and we’ve been successful doing that. But it came from listening to the
communities and our constituents. Bill Myers: So I think we’re going to go back for our final question to personnel strategies. We’ve talked about the product strategies. We’ve talked about the opportunity, why credit unions should be involved in this, some of the compliance challenges. But, Miriam, if you would help us to the end thinking about how to make your Hispanic outreach
effective with good personnel strategies. Miriam De Dios: Definitely. And we’ve touched on a couple of these practices, but I’ll mention a few others. And it all comes back to that right organizational mentality to serve this community, to have that buy-in at all levels of the organization, and, again, especially for those communities where the Hispanic population is growing but
may not be the majority yet, because folks don’t necessarily understand some of those cultural differences or why to reach out to this market. That will make the personnel strategies a little bit easier to adapt. And a few things to keep in mind would be the recruiting as well as the hiring of bilingual and bicultural staff. I was really excited to hear the Chairman
reading off all of the places where NCUA goes to attract talent. And that’s exactly what we’re talking about, not just going out to CareerBuilder, but looking at some of these other associations, groups that already have a pool of candidates, potentially, for you, going out to the Spanish-language media, posting those announcements
there. I would also encourage you to think about testing Spanish proficiency when it comes to personnel strategies, because various segments of the population have varying levels of Spanish usage. If you talk to my brother in Spanish you’re going to get probably more Spanglish and English than you do if you talk to my sister
or you talk to myself truly in Spanish. And so what that creates is sometimes even confusion around the language. You add financial terminology on top of that, and you have a number of ways to say credit union in Spanish, you have a couple of ways of saying member in Spanish. And I actually commend the NCUA for the Spanish website that
you do have available. We talk to our credit unions about that all the time, because the language is also very consistent with what credit unions in Latin America use and what we recommend. But the last thing that you want is confusion amongst your personnel, which then creates maybe some confusion with your membership and maybe some misunderstanding.
So testing that upfront, implementing a Spanish-language certification program for those bilingual staff, as well as looking at a bilingual pay differential to attract talent, especially in very competitive markets. So recruiting, hiring, training. I mean, can’t underscore the importance of that, as has been mentioned before, for
all staff to understand things like why people are unbanked and why somebody has a matricula, or what is a quinceañera and why do people spend so much on that, all the way to specialized training for your bilingual staff, again, on that Spanish proficiency. In addition to that, looking at your retention, your development
strategies. The last thing that you want is to dump a Hispanic growth program on one individual and have them be the one to do all the community outreach, to translate all of your brochures, to help members with their loans and account opening. You probably aren’t going to see that individual very long at the credit
union, so looking at how to develop that individual, how to build a team around that. How to make sure that everybody has a role in this is going to be critical on the retention side of things, as well. Maria Martinez: Also the other thing that we’ve done is we developed some relationships with other Latin American countries
where you can do exchange programs. I know some of them have come and visited us at the credit union, and we’ve gone and visited their credit unions. In Mexico we did that with (inaudible). And they’re very willing to help you with that, and that way you can go and you can learn more about their culture. And it’s a really nice trip, too. They treat
you really nice. So it’s always nice to do that. Miriam De Dios: The World Council of Credit Unions, I would encourage you to check them out. They often put out some of these exchange programs, and it could be a great resource for that. Bill Myers: So, panel, I want to thank you for answering my easy questions. Monica, can I call you up now? We have hard questions
from the audience. So this is the easy part of the – Monica Davy: So these are the questions that we got online. We have about 160 people who have been streaming today’s event. I have not yet collected questions from in the room, so if you have questions please raise your hand and someone from the back will get them. This first one is an easy one. Maria, you
mentioned earlier I think it was a tool that Coopera had. Could you restate what that website tool is that you referenced earlier? Maria Martinez: Yes, it’s called El Poder es Tuyo. Right? Miriam De Dios: Yes, which means the power is yours. Maria Martinez: The power is yours, roughly translated. Monica Davy: And where can they find the link? Maria Martinez: Okay, if you go into my
– into I guess Coopera’s website – Miriam De Dios: Yes. Maria Martinez: – you can find it there. You can go into my website, too, and you can kind of look through it. It’s free. It’s out there for anybody to use, members and nonmembers. But it’s called El Poder es Tuyo. Miriam De Dios: And they can reach out to me, as well, Monica. Monica Davy: Okay. All right. The
next question. We want to find tools to help with lending needs for members with ITINs. What tools are available to help the credit unions with underwriting these loans? Maria Martinez: First of all, I think if you’re going to use an ITIN lending program, first of all you’ve got to write your policies and procedures for that, because you’ve got to train your staff, and
it also has to be in compliance. So you’ve got to follow – it’s basically the same guidelines that you would use for any other lending that you would do within the credit union except that now you’re using an ITIN, and that is your Social Security number. Now, a lot of the times those people that have ITINs, because they’re so new, they’re not going to have credit
history already on the system. So what you’ve got to do is you’ve got to start looking at creditors. A lot of them, because they didn’t have a Social Security number, what they do, they use a lot of the owner finance programs. So they have a house that they’re buying right now. It may be owner financed. So what you’re going to have to do is do a lot of checking
through the phone and through letters of reference so that you can start doing your ITIN lending. Your ITIN lending is so important, because once you get them on the system then you can start doing more lending for them. Use collateral loans. Use home equity loans that you can do to start them up. Because more than likely if they own a home they’re using it through
an owner finance. Maybe the uncle is financing it for them. Somebody’s financing it for them. And they can bring you their amortization schedule. You can look at it. They can bring you copies of checks that they’ve used to make their payments, or even just vouchers that they give, because maybe they make payments in cash, but they get receipts from the
landlord. So all that you’re going to have to document. And, as for the examiners, they’re okay as long as you document, right, Sergio? Sergio Osuna: Yes, it’s just like Maria mentioned, just like any type of a lending program, if it’s something new to the credit union, we’re going to go in during an exam and make sure that management and
the Board have done their homework, done some research on the products and established, which is key, obviously, the policies addressing that program before the program is actually implemented, and also that you have the proper controls in place. These are – this type of lending might be considered a little bit riskier. So what have you
done? What do you have in place now to compensate for that additional risk? Obviously the underwriting and the documentation is going to be very important, but understanding that there is more risk in this program, do we have the proper staffing in the collections department, for example? Because some of these programs you’re
going to be dealing with members that sometimes need to be reminded to make their payments, so, again, staffing up your collections program is going to be key. So, again, what we’re looking at or what we’re going to be looking at when we’re onsite is making sure that you’ve covered all the bases and that you’ve had – you’ve
done your due diligence and established the proper controls to compensate for the additional risk that these types of programs might pose. Miriam De Dios: And, quickly, just one more tool for folks to explore would be an alternative credit scoring system, so, again, looking at the fact that folks may have little credit
or no credit, some of the bureaus, the large bureaus, have separate alternative credit scoring systems that they’ve created for what they call thin files or no files which can help you look at, again, the credit worthiness of that individual, bringing in those nontraditional forms of payment that they may have
that aren’t recorded by the credit bureaus today. So check those out as well. Monica Davy: Okay. Is there a network of resources for us to gain the expertise we need? Bob Peterson: There are probably a number of networks. I get mail every day from CUES Net. We get from –
our league sends out information every day on items of interest and issues of interest to the members of our league. I know CUNA does the same thing. So it’s easy to go out on the network, search for those kinds of resources and take your pick. Whatever your interest
level might be in any particular credit union-related subject or financial institution subject, for that matter, you can find it on the net. Not to be too general there, but there’s just so many out there, I think, that you can find pretty much what you want. Try Google. Maria Martinez: Also I think like the Network of Latino Credit
Unions and Professionals, I know we have our website out there. It’s not a very interactive website, but you can find our names out there. And trust me, you send me an email, you send one of the people in that list an email and we’ll send you resources. I know Coopera, you all have a lot of tools that you all can use, and that is through CUNA. But the
networking that you create within – come to our event in February. You’ll meet a lot of the people that are already servicing this group. And exchange your business cards. And I get a lot of questions through that, and it’s worked out really good. Miriam De Dios: We also have more than 500 members on a Linkedln group that folks might want to check out. Again,
people that are interested in this topic to share ideas, best practices will post information out there. So check that out, as well as our newsletter. Bill Myers: What’s the name of the group? Miriam De Dios: The Hispanic Outreach Connection, and if you Google Coopera CUNA Hispanic Outreach Connection you’ll find it. Monica Davy: Okay. Here are two I want you to take
together. How can we as credit unions apply for authorization to use ITINs? What is the process? And then, in addition to the matricula consular from the Mexican government, what other alternative forms of identification would you recommend credit unions should accept? Maria Martinez: Can I take that? Miriam De Dios: Yes. Maria Martinez: On
the ITIN, the – you can contact the IRS and they have the application. I believe the application is also online. If you just go into the IRS.gov you can apply with them. Or if you have one of the IRS agents that deals with the VITA program you can also contact them and they can take you through the process. But it’s just filling out
the application. It’s not very hard. I mean, they may deny you the first time, because they do have to go through a lot of background checks and all that. But other than that, I mean, once you have it in it’s just a matter of renewing it every year. Sergio Osuna: Just to clarify what Maria’s referring to is being an
acceptance agent, not – your question was what do you need to do to qualify to use the ITIN? Monica Davy: So what is the process for – what can we, as a credit union, do to apply for authorization to issue ITINs? Sergio Osuna: Okay. Maria Martinez: And then there’s two types. You can become an acceptance agent, which is
what we are. And what that does is when the person comes in they bring all the documents that are required by the IRS in order for you to get an ITIN, which is like birth certificates and passports. There’s a whole bunch of documents. And then what you do because you’re an acceptance agent, you’ve already been trained on it, you verify that those documents – it’s
almost like a notary – you verify that those documents are legible and legitimate, and then you submit the application without sending the original documents. And then you can also be certified, not acceptance agent but just a certified agent, where you can review the whole process, you package it and you send it to the IRS, but you send all the original
documents with it. And a lot of the times the people don’t want to let go those documents, so that’s why being an acceptance agent, it’s a lot better. Monica Davy: And then for ID purposes, what other forms of identification would you recommend credit unions accept? Maria Martinez: We use other countries’ passports. We use the matricula consular.
Some of the other consulates besides the Mexican consulate, they also have other types of IDs that you can – what I would recommend is visit some of the consulates of, depending if it’s like from Latin America, visit those consulates and see what other forms of IDs they have. Those are the most common ones in my region because
mostly we’re so close to the Mexican region there that the majority of them are from Mexican descent. But if you’re in another area where you have maybe Puerto Ricans or Nicaraguans, you need to identify the consulate for that one region and see what other types of documents they have. The process itself takes – it’s a lengthy
process for them, and they verify everything. I know I have a matricula consular, and when I went they wanted to know everything about me. So it’s even worse than getting a passport. It’s very lengthy. Bob Peterson: As a word of caution, I was just going to insert here, I was recently contacted about what – how credit unions felt about
municipal IDs. This is a fairly new thing that some of the cities across the country are adopting. I might caution you to be very careful about that. I don’t think that’s something you want to readily accept as a defining document for acceptance. My attitude is to kind of watch and see how that develops, more immediately in
the El Paso environment, but wherever those municipal IDs are being considered now. Miriam De Dios: I would ask you to take a look at your CIP, though, and remember, it says government-issued ID. It doesn’t say U.S. government-issued ID. So as long as it’s a government-issued ID that meets all of the other requirements,
technically it could become a part of your procedures, a part of your policy. And the identification that Maria was mentioning, sometimes those are called (inaudible), the national ID cards of other countries. When you look at the consulate cards, Guatemala has a consulate card, and I know others are looking at actual cards. In Mexico there’s the Mexican
voter registration card. I have one of those, as well. So, again, they’re government issued, again, not U.S. government issued, because they don’t have to be, necessarily. And if you think about some of the driver’s licenses now in California, some of those are issued to nonresidents. They look a little bit different than the traditional driver’s licenses.
So I would encourage you to take a look at some of those and really explore those options. Monica Davy: So we have a lot more questions here. I’m going to do this one last one. It’s four parts, and it’s from someone here, so I just want to make sure we get to it. And one of these questions is dear to me and to my program, which hopefully Bill
will be able to answer. How do you help and capture Hispanic members when you have a Board of Directors with no diversity and one that does not see the value in that segment of the community? That’s A. B, what can NCUA do to help Board of Directors be more diverse and representative
of the community? C, does the Juntos Avanzamos take into consideration Board of Directors composition? Can each CEO share how their current Board reflects their community? And then Part D, banks have CRA requirements. Credit unions, who should be all about community, have
no requirements. Why? And then I’m going to commit to providing answers to these as a follow-up. Hopefully we can do that. But we’re going to have to make that the last. Bob Peterson: I’ll take the last two, if you all don’t mind. The Juntos Avanzamos designation does look at the composition of your staff, I mentioned
earlier the bilingual nature of your staff, the cultural nature of your staff. And we do look at the composition of the Board. It adds points, if you will, in that scoring system if your Board is composed of – is reflective of the composition of the community. So that’s important. And I’ve already forgotten the other
one. Monica Davy: The last question, banks have the CRA requirements and credit unions – Bob Peterson: That’s an interesting thing. I’ve already indicated my interest in relationships in the community, and I do that as a matter of course. I’ve had conversation with people who advocate this, that I don’t think there’s anything wrong
with credit unions not having a CRA commitment. I think that’s healthy, because we don’t need it, because we don’t have to prove anything. We’re already committed to our communities, and we do that as a matter of course. But the benefit to CRA, the CRA existence with banks is that we can partner with
banks, especially for your CDFI and the bank is a CDFI, you can use their CRA funds to fund your projects in the community, and some of them will gladly toss dollars at you in order to help you do those things, and especially where it’s beneficial or perceived, at least, to be beneficial not
only to the credit union but to that bank whose CRA monies are being used. Obviously, the more appropriate ones are the ones, the bigger banks who have a lot of CRA dollars that they have to spend, underline have to spend. And so in a market, for example, where I operate, there’s a community with 23 banks and 100,000 population. That’s a
lot of CRA dollars that have to be spread around in that community. I’m not above using some of those dollars. Miriam De Dios: Maybe to address the first question in terms of kind of building buy-in if you don’t have a Board that’s diverse today, I wouldn’t use that as a notion to impede anything like this. We work with a number of credit unions who
start out with no Hispanic members on their Board. It is, obviously, a long-term initiative. And I would say start with painting the business case. Let’s look at the potential of this market again. There is a very compelling business case. And I wanted to actually bring up a study that we recently did in partnership with CUNA in 2014. CUNA’s
economists took a look at nearly 90 credit unions across the country that had implemented a Hispanic growth program. And what we wanted to see was what happened to the financial performance of those credit unions three years prior to them implementing a program and three years post. And what we found were very favorable results. And, again, this is
looking at the overall financial picture of the credit union. We can’t isolate for just the Hispanic program, but it certainly goes a long way in terms of painting the business case. We saw that membership overall at the credit union increased by 3 percentage points. We saw that lending grew, especially in the third year post launching a
Hispanic growth program. So it went from 5 percent to 9 percent. Delinquency was pretty much negligible, a 2 basis point increase, from 1.5 to 1.52 percent. Fourteen basis points increase in ROA. So, again, you can’t isolate for this program, but it goes to show that there is a tremendous business
case to serving this community. When we also measure the growth rates of our client credit unions, 100 percent of the time Hispanic membership growth outpaces overall membership growth at the credit union, sometimes three times, sometimes four times. Time and time again this market is pointing to that membership
growth, and it’s that young membership, all of those things that I know every credit union is interested in. Maria Martinez: I’ll also say share the comments from Chairman Matz. If you share those comments, those statistics, that tells it all. And if you go to your Board and say put it on your business plan, add it to your business
plan that you are going to be serving Hispanic members, and then use some of the statistics. What’s going on? What are the demographics on this? I think if you put that into perspective it’s a lot easier to sell it to your Board, because first of all your Board has to buy into it. They’re the ones that are going to approve that business plan. And once you
have it on your business plan, then run with it. Sergio Osuna: I think you mentioned part of the question was Boards that have no interest in doing that. What Miriam pointed out, the business aspect of it is very important to at least start the process or the conversation, at least the conversation going. In areas where the
Hispanic community is not yet the majority or is not a substantial part of the community, the approach can be taken that you can start, you can be in on the ground floor and start serving that community and start building that relationship that is sure to grow, because that’s the way it’s
going. So, again, the business aspect is important, but then again the human aspect of it. You’re actually helping out a community that is in need in a lot of cases, so, and that’s what credit unions are all about. Maria Martinez: We’re the answer to them. We are. Bill
Myers: So we’re going to invite Miguel Polanco, from the OMWI office, to make closing remarks. Miguel Polanco: Thank you, Bill. 00 00 [Spanish language] In closing, on behalf of our agency, the National Credit Union Administration, better known by its acronym,
NCUA, we would like to thank each and every one of you for participating in this discussion about the Hispanic market. It has truly been 00 a pleasure to have hosted this important event. As we all know, the vast majority of credit unions is looking for the best way to advance and grow its membership. In a
market that has become more and more competitive each day, attracting new members depends fundamentally in offering products and services that fit its specific target market needs. 00 As such, we must remain constantly vigilant for any obstacles that might derail or limit our goals, while recognizing the opportunities that might assist in our meeting our growth
targets. As we have discussed today, the Hispanic market is full of opportunities for those that invest the time and effort to learn more about Hispanic communities. Establishing a connection with 00 and offering excellent service to this sector of the population opens the doors to this influential and ever-growing market. We hope today’s discussion has served as both an
inspiration and an initial guide on how to include this market as part of your respective growth plans. Before we part, we would like to thank all of those that supported and contributed to 00 today’s event, first, NCUA’s Chairman of the Board, Ms. Debbie Matz; NCUA’s Executive Director, Mark Treichel; his Deputy Executive Director, John Kutchey; and
to NCUA Directors Bill Myers, Todd Harper, Ed Dorris and their staff. Also, we would like to thank our distinguished expert panel. They have shared their experience, 00 ideas and the knowledge necessary to expand our reach and attract this Hispanic market. To Miriam De Dios, Maria Martinez, Robert Peterson and Sergio Osuna,
we thank you. And of course we thank the staff of the Office of Minority and Women Inclusion, the Office of the Small Credit Union Initiatives and the Office of Public 00 and Congressional Affairs, better known as OMWI, OSCUl and PACA, for their dedication and coordination of this great event, especially [Carmen Ramos], Cynthia
Vaughn, Kathryn Baxter, Kenzie Snowden and John Fairbanks. And most of all we would like to thank you for being here with us this afternoon to learn about the characteristics 00 of the Hispanic market, the existing barriers we must overcome to get to know and attract this market, and the vast opportunities that exist both economically and socially
when we offer our services to this growing community. Please remember a recording of this webinar will be available online at our website at www. ncua. gov about four to five 00 weeks from now. Thank you for your interest, cooperation and dedication to the noble mission of the cooperative movement. We wish you much success
in all of your future endeavors. Thank you for attending. Have a great holiday season. And let’s give a final round of applause to our panel. Thank you. 00

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