(archived article) By Tania Padgett STAFF WRITER June 23, 2002 For Immediate Release Humberto Diaz, a Mexican immigrant, has lived in the United States for 23 years. Last month, he opened a savings account for the first time. Diaz, a restaurant food preparer from the South Bronx, opened his account with Banco Popular after he heard about Acceso Popular, the bank's comprehensive outreach program that specifically targets Mexicans. The program enables customers to open accounts with just two forms of Mexican identification. Most banks require U.S. identification, which many recent immigrants do not have. "I always wanted to put my money in a U.S. bank, but couldn't because I didn't have the right kind of ID," the Spanish-speaking Diaz told Newsday through an interpreter. "Now I no longer have to keep my money in a mattress," he said, laughing. "Now my money is secure." Such a service was unheard of two years ago, but banks, like other companies, are recognizing that the fast-growing Hispanic market is lucrative and have begun to target it more aggressively. In the past six months, major banks such as Banco Popular North America, a Puerto Rican-based bank with 45 branches in New York; Doral Bank New York , another Puerto Rican-based bank with three branches in New York, plus financial giants J.P. Morgan Chase & Co., FleetBoston Financial Corp. and Citigroup have launched or expanded their banking programs focusing on the Hispanic population. Much of the to-do has been driven by recent census numbers showing that Hispanics are the largest minority group in New York and the United States. They boast an estimated $452 billion in consumer buying power and generate $186 billion in revenue from their businesses. "Those numbers definitely have gotten the attention of U.S. banks," said Yuri Radzievsky, chairman and chief executive of a multicultural branding agency, Manhattan-based GlobalWorks Group LLC, that helps companies target Hispanics as well as other groups. "And these moves are just the beginning," he said. "Banks realize that if they don't start going after this group more aggressively, it could hurt revenues in the future." So the race is on, but there are obstacles. The Hispanic market is one of the most difficult because it is extremely diverse ethnically and economically. There is no "one" Hispanic market. There is also the question of trust, many experts said. Some new immigrants from Latin America are suspicious of banks because of unpleasant experiences with institutions in their own country. If a country is going through a political or economic crisis, banks sometimes will shut down, preventing customers from getting their money, as has been the case in Argentina in the past year. "This is not unusual in Latin American countries," said Manuel Chinea, senior vice president of Banco Popular North America. "And some people have experienced firsthand having their bank assets frozen, and they remember this and bring that mistrust of banks here." In the past, Hispanics also have endured more than their share of bad banking experiences in the United States. In recent years, predatory lenders have left many Hispanics saddled with difficult-to-pay-back high-interest mortgages, while legitimate lenders continue to deny loan applications of Hispanics more often than whites, recent Home Mortgage Disclosure Act (HMDA) data reveals. "Hispanics are denied prime loans in part because of lack of credit, collateral or even immigration status," said Matthew Lee, director of the South Bronx advocacy group Inner City Press/Community on the Move. "But some of it is blatant discrimination, and banks really need to look at that first before anything else." For 10 years, the extent of bank outreach to Spanish-speaking communities was to translate banking materials and ATM displays into Spanish. Experts say the size of the Hispanic market demands more be done, if banks are to avoid losing millions of potential new customers. Hispanics are the largest minority group in the United States and New York City, swelling to 35.2 million nationwide in the past 10 years, and to 2.1 million across the city, according to the 2000 Census, which lists 28 subgroups in the category of Hispanic or Latino. Research firms expect the group to expand at a substantial clip. Strategic Research Corp., a Santa Barbara, Calif., group, projects that by 2050, Hispanics in the United States will number more than 154 million, or about 30 percent of the population. Nationwide, between 1992 and 1997 - the latest census material available - Hispanic business grew 30 percent to 1.2 million businesses generating $186 billion in receipts, running apace with Asian business, which grew 30.2 percent to 913,000 businesses, generating $306 billion in receipts. Hispanic businesses also have outpaced African-American business, which grew by 29.6 percent to 823,000, generating $72 billion in receipts. To tap that burgeoning wealth, Charlotte, N.C.-based Bank of America Corp. said in April that it has quadrupled its budget for minority marketing to $40 million this year - most of which is earmarked for the Hispanic market, with slogans such as "Creemos en ti" - Spanish for "We believe in you," said Gillian Breidenbach, a spokeswoman at Bank of America. And FleetBoston Financial and Chase now have budgets "in the millions" or "double-digit millions" to cater to Hispanic and other minority markets, according to spokesmen at both banks. They have stepped up their efforts in other ways, including diversifying and expanding their workforces and drawing on the expertise of specialists: Fleet recently contracted Radzievsky of GlobalWorks "because we need to take our outreach to Hispanics to the next level," said Fleet spokeswoman Rena DeSisto. More major banks, including Banco Popular and Citigroup, offer discounted wire transfer services to Mexico without a wide range of identification. "Mexicans are a fast growing market in the U.S. and in New York City and are a lucrative market," said Chinea of Banco Popular. Indeed. Immigrants wire about $18 billion to Latin America, and more than half of that goes to Mexico, according to a recent report by the Multilateral Investment Fund of the Inter-American Development Bank. Banco Popular also has created a check cashing division, "because many Hispanics are used to chasing their checks there," Chinea said. Citigroup is aggressively pursing the Hispanic market by acquisitions. Last year, it purchased Banamex, Mexico's largest bank, and is in the process of buying Golden State Bank, a large San Francisco savings and loan which has branches in many Hispanic markets. Meanwhile, banks like Doral and J.P. Morgan Chase are filling many of their branches with Spanish-speaking employees or trying to target Hispanic businesses with special loan programs and extensive Spanish-language advertising campaigns. Eight months ago, Chase created BancoChase.com for Hispanics who feel more comfortable doing their online banking in Spanish. Miguel Garzon, who is Colombian and owner of LaEspiguita Bakery Inc. in Brentwood, said he started doing business with the J.P. Morgan Chase branch in Brentwood because it was nearby and because several employees in the branch are Colombian. "It is good when someone is from your country and speaks your language," Garzon said. Pat Carmichael, Long Island regional executive for the bank, said Chase tries to get the bank personnel to reflect the community - Brentwood, she said, has a large Colombian population. Jose Fuentes, a Colombian who lives in Washington Heights, said that only Doral Bank would give him a loan to open his feng shui crafts store in Washington Heights. "The people at the branch spoke to me in Spanish and they took into account that I had a similar business in my country," he said. Some bankers who are more culturally aware of particular groups find they are attracting a loyal clientele. "Hispanic businesspeople are trying to get to the next level, and many times don't have the financials to justify loan requests and are instantly rejected by other institutions," said Richard F. Bonini, senior vice president and chief financial officer at Doral Bank New York. "Doral takes into consideration the culture and the background before making a decision." While banks are apparently making some inroads, the biggest challenge is tailoring their services to the differences within the broad Hispanic market. "There are definitely challenges," Bonini said. "We've found that the Mexicans and Colombians in Astoria are more affluent, Dominicans in Washington Heights are more entrepreneurial but very distrustful of banks, and the Puerto Rican market is far more assimilated into American culture than either group." Walther Delgado, executive director of the Manhattan-based Audubon Partnership for Economic Development, which does microlending to many Dominican businesses, said many in Hispanic communities prefer to bypass the mainstream financial system altogether. "Latinos believe they need to go to check cashiers to cash their checks; they save by putting it under the mattress or in aluminum foil in the freezer," Delgado said. "Checks are viewed with suspicion because they can bounce, and if they want a loan they go to the prestamistas, or loan sharks, that charge them interest which is as high as 60 percent." Delgado and Lee of Inner City Press believe that, despite the recent efforts, banks' attempts to reach the Hispanic market have been lukewarm. Lee also notes that, according to government home mortgage statistics, Hispanics are denied prime loans far more than whites. He said Citigroup's denial rate to Hispanics is worse than the industry national average. Indeed. In New York, Citigroup denies Hispanics conventional loans almost 3.5 times more than whites, according to the 2000 Home Mortgage Disclosure Act. The industry average is 1.4 times. "We, along with federal and enforcement agencies, do not believe that selective HMDA data give a complete picture of the lending process," said spokesman Mark Rodgers of Citigroup. Fleet and Banco Popular deny Hispanics slightly above the industry average, and Chase and Doral's rate of denial to Hispanics is less, according to government statistics. "Banks must do more to gain the trust of Hispanics," Delgado said. "And while some of the programs sound promising, it will mean nothing if no one Hispanic is participating in them." Copyright © 2002, Newsday, Inc.