Servicing the Hispanic Market: The Stakes Go Up MacroMonitor Marketing Report Vol. V, No. 5 September 2001

The 2000 U.S. Census counted more than 35 million Hispanic U.S. residents, accounting for 12.5% of the U.S. population. The U.S. Hispanic population is now the fifth-largest Hispanic group in the world, just behind the population of Argentina. By 2025, it will constitute the second-largest group, behind only the population of Mexico. This dramatic demographic shift is a wake-up call to businesses that have not yet put in place a strategy to serve the needs of a huge and important market segment.

The media extensively covered the new demographic indicators for the Hispanic population resulting from the 2000 Census. The 2000–01 MacroMonitor survey and the attitudinal results of its Hispanic household sample provide a financial marketing dimension to these new data. Our database offers valuable insights into the financial needs and attitudes of assimilated Hispanic households. (Agreement to fill out a financial survey in English implies an assimilated Hispanic household well integrated into the mainstream financial environment.)

Rising household incomes and the family-oriented culture of Hispanic households portend strong market potential for financial products such as credit cards, home mortgages, and life insurance. The attitudes that Hispanic respondents in the MacroMonitor survey expressed suggest that meeting asset-accumulation needs presents marketing opportunities for financial institutions as well.

Hispanic Financial Attitudes

Hispanic Financial Attitudes

To be able to capture the increasing numbers of Hispanic households achieving middle-class status in the coming years, financial institutions should be establishing relationships with the Hispanic community now, when the competition to meet its financial needs is still wide open. At the very least, financial institutions need to develop a communication strategy that goes beyond simply translating marketing information into Spanish.

U.S. financial institutions might start with focusing on financial (particularly credit) education and building trust. Many Hispanics come from countries where obtaining a bank account or a loan is unheard of for people not in the middle class. In other cases, bank failures and unstable economies in their home countries have kept Hispanic consumers from putting their trust in banks. Even among MacroMonitor's assimilated Hispanic household sample, concern about bank safety and unwillingness to rely on banks for credit are most clearly evident.

As the young Hispanic population matures and as more Hispanics are born in the United States, the Hispanic community will eventually integrate into the mainstream U.S. economy (a process no different from the integration and assimilation of the sons and daughters of nineteenth-century Irish, Italian, and Polish immigrants). Already, a majority of the Hispanics living in the United States (60%) were born here. Establishing awareness in and ties with the Hispanic community now should give financial institutions a chance of securing a good and profitable share of what promises to be a formidable retail financial market.