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Orange County Business Journal
Behind Banking's Chase For Hispanics: Building Trust
By Pat Maio
15 November 2004
Orange County Business Journal
Volume 27; Issue 46; ISSN: 10517480
When Luis Miguel Ortiz Haro Amieva arrived as Mexican consul in Santa Ana in late 2002, he couldn't bring himself to pay his American Express bills by mail.
Instead, he'd drop by the local office on Main Street in Santa Ana, stand in long lines, and get a receipt.
"I prefer to look into someone's eyes and see their soul," Ortiz Haro Amieva said.
As much as commercial banks in Orange County like to brag about how much they're doing to draw Hispanics, Ortiz Haro Amieva's story says much about the uphill battle that remains.
Many Hispanics-especially recent immigrants-shun the impersonal nature of area banks and instead deal almost exclusively in cash. They pay high fees to wire an average of $300 a month to families in Mexico or elsewhere in Latin America.
"It's not about the fees-forget about the fees-it's about trust," Ortiz Haro Amieva said. "This is not the traditional client for banks, so banks need to find a different way to reach out to this non-traditional market."
The stakes are increasing. This summer, the U.S. Census officially declared Orange County's white population as a minority with Hispanics making up a third of the county's 3 million people.
In the next few decades, Hispanics are expected to become the majority. But yet there is no startup bank in the county that this ethnic group can claim as its own.
Wells Fargo & Co., Bank of America Corp., Banco Popular and Union Bank of California have strategies to reach Hispanics.
All of the big banks have bilingual tellers in Hispanic areas. Wells Fargo even has TVs showing CNN en espanol in its lobby at Main Street and Warner Avenue in Santa Ana.
All of the banks are on board with financial literacy programs, outreach to churches, nonprofits and schools to show Hispanics why opening an account is important. They also have programs in place to help Hispanics "remit" funds, or transfer money securely to family and friends in Mexico, the country most targeted for remittance.
All have phone systems and Web sites in Spanish, with the exception of Union Bank of California, which is developing a Web site to be up next year, according to Rossina Gallegos, vice president and Hispanic segment manager for Southern California at Union Bank of California.
Dealing With Fear
Another challenge: convincing Hispanics banks here aren't like those in their homelands.
"Banking systems in Mexico aren't as secure, so we try to build trust," said Kim Young, Wells Fargo regional president for Orange County. "If someone is trying to jump into the market now, they are behind the game."
Last December, when twin fires broke out at the La Serena Apartment complex on South Lyon Street in Santa Ana, it left hundreds of people homeless. It also left many broke, according to Ortiz Haro Amieva. Many of the Hispanic immigrants living there had lost their life savings in the fire.
Thousands of dollars in cash had been hidden in mattresses or in closets, he said.
Getting Hispanics to open checking and savings accounts isn't easy. Many are concerned about their immigration status, and prefer to send cash to relatives using money wire transfer services inside grocery stores where their citizenship isn't questioned. Some even use friends as messengers to get money delivered to relatives in Mexico.
The amount of money sent to Mexico has increased dramatically from $9.2 billion in 2001 to $13.2 billion in 2003, according to estimates provided by Manuel Orozco, a senior researcher with the Institute for the Study of International Migration at Georgetown University.
Some officials say the amount could hit the $16 billion mark this year.
Executives at financial institutions stress their interest isn't exclusively on transfers, but on establishing a long-term relationship with the senders.
Most banks accept the Matricula Consular de Mexico, an identification card issued by the consulate, to open an account, along with other forms of identification, such as a Social Security card or taxpayer identification card.
Vernon Aguirre, California regional executive at Banco Popular in Santa Fe Springs, is looking to an acquisition strategy to pull customers into its lobbies. The bank, which is based in Puerto Rico, wants to double its branches in Hispanic areas to about 100 branches in Southern California in the next five years, he said. Wells Fargo's Young: "Banking systems in Mexico aren't as secure, so we try to build trust"
In the case of Banco Popular's buy earlier this year of Quaker City Bancorp of Whittier, it added 16 branches inside Wal-Mart stores. Banco Popular, which operates 44 branches regionally, also runs a network of 60 check cashing stores, including 10 in and around OC.
"This is the path to get the unbanked into the banking system," Aguirre said.
Banking laws bar banks from opening checking and savings accounts at check cashing stores. But that doesn't stop the selling for services offered at Banco Popular branches.
Brochures are placed in the lobbies of the check cashing stores that explain basics on how to open accounts in Banco Popular branches, how to establish credit through secured credit cards, or how to buy a home for the first time.
Banco Popular offers its "Accesso Popular" to Hispanic customers as a way to send money to Mexico via the automated teller machine network.
Accounts that give the customer access to checking and savings can be opened with a Mexican Matricula card. ATM cards are given to the accountholder, and a designated family member in Mexico, who can withdraw cash from the U.S. account. A foreign ATM fee of $1.50 is charged to the customer in Mexico for the withdrawal.
Last month, Wells Fargo said that the number of accounts opened using the Mexican Matricula card had surpassed half a million since it began accepting the card nearly three years ago.
In recent months, the bank cut its U.S.-Mexico consumer remittance fee by 20%, and increased its daily transfer limit from $1,000 to $3,000, for customers using its "InterCuenta Express."
The service allows customers to send money from their Wells Fargo account to more than 4,000 banks and 10,700 ATMs in Mexico.
Maria C. Mesa, Bank of America's consumer market executive for North Orange County, claims her bank was the first to use bilingual ATMs.
"Our goal is to give access to traditional financial services to the underserved," Mesa said.
Bank of America offers its own remittance for Hispanics called "SafeSend," which also is an international ATM service to Mexico. With SafeSend, Hispanic consumers can send money by phone or via ATMs. In Mexico, the recipient uses a secure ATM card to access the money at 20,000 ATMS.
Hispanic consumers have another benefit as well.
In 2003, Bank of America bought a 25% stake in Spain's Grupo Financiero Santander Serfin SA de CV, which operates the third largest bank in Mexico. Fees are waived for ATM transactions when customers use any of the Santander Serfin ATMs. Banco Popular in Anaheim: hopes to turn check cashers into depositors
Union Bank's Gallegos said her bank, like Banco Popular, uses its check cashing franchise of 12 locations in Hispanic neighborhoods in Los Angeles and Orange counties as a way to entice customers into branches.
"Our presence in Orange County is extremely strong," said Gallegos, adding that 35% of her bank's staff at 34 Orange County branches is Hispanic.
In the past year, Union Bank began designating telephones in branch lobbies where customers can wire money to family and friends in Mexico through its partnership with MoneyGram International Inc.
"Everybody is putting a lot of effort into marketing to Hispanics. It's not only the right thing, but it makes good economic sense," Gallegos said.