Does the growth in numbers of minority households translate into increased marketing opportunities for financial-services providers? Using data from the U.S. Census and from the MacroMonitor surveys (1994–2000), this report focuses on the assimilated or mainstreamed minority households' potential as financial-services customers. The resulting perspective suggests that African American, Hispanic, and Asian households vary in the degree and level of participation in the mainstream U.S. financial system given their differences in demographics and in life-stage and financial profiles.

The MacroMonitor survey, by virtue of how it obtains the data (that is, the respondents need to speak and read English and be comfortable in providing detailed and sensitive information about their household finances), provides information about minority households that are fully assimilated into the U.S. socioeconomic and cultural mainstream. The resulting profiles of minority households, therefore, represent those households that are most likely to be realistic prospects for various financial products and services offerings.

Highlights from this report include the following:

• In terms of market size, African American households remain the largest ethnic or racial minority group in the United States. Although the latest census data indicate that the Hispanic population is now on parity with the African American population, the larger size of Hispanic households results in a smaller proportion of Hispanic households (9% of total U.S. households) vis-à-vis African American households (12%).
• African American households generally have a higher proportion of older household heads and thus are likely to be more focused on retirement needs than are Hispanic and Asian households.
• The significantly high proportion of assimilated Hispanic households with young children means a focus on financial products and services typically desired by growing families: transactions, mortgages, life insurance, and credit cards.
• Assimilated Asian households represent the youngest and most well-educated and affluent ethnic group in the MacroMonitor database. Their financial profile of high assets and high debt makes these minority-group members particularly attractive to financial institutions. They are likely to be receptive to online services, especially bill presentment and payment, given their youth and high level of education.

MINORITY HOUSEHOLDS IN THE U.S. POPULATION



Institutions seeking to market financial services to minority households by appealing to their sense of community, culture, or heritage will probably find rewards in that approach. But households that are sufficiently well assimilated financially will be remarkably similar to nonminority households in terms of their financial needs and the mix of products and services that they will use to meet those needs.

It is clear that ethnic and cultural diversity will have an increasing impact on American society. The findings in this report suggest that financial institutions may benefit from a two-step approach to marketing to minority households. The first involves meeting their immediate and basic financial needs as they establish a foothold in mainstream U.S. society. The second step involves introducing a more traditional relationship-based approach as minority households fully integrate into the mainstream.