The year-long study titled “Perdido En La Traducción: The Opportunity in Financial Services for Latinos” also demonstrates for the first time that persuading households to keep their money in banks and credit unions could lower the risk of robberies and raise property values.
Nationwide, there is more than $169 billion floating outside the formal banking system attributed to unbanked households, of which $53 billion comes from unbanked Latino households.
“This study gives the financial services industry, policy makers and market watchers information they can use and a real measurement of the scope of this hidden market. At the same time, it not only represents a significant financial opportunity, but also highlights the wide-ranging benefits for communities,” says Greg Fairchild, executive director of the Tayloe Murphy Center and Darden professor.
The study focuses on unbanked Latino households in Virginia and North Carolina. Latinos are the fastest- growing multi-ethnic group in many states, including Virginia, as well as nationwide.
Many of the findings can also be applied nationally to any household that is unbanked, regardless of ethnicity, background, geographic location or length or status of residence.
California, Texas, New York, Florida and Georgia are the top five states for the greatest amount of money kept outside of banks and credit unions by such households, according to the FDIC’s full list of yearly income of unbanked households by state.
“Using rigorous statistical analysis, qualitative field research and case study, we focused on the challenges of serving Latinos and other unbanked households as well as how banks and credit unions can reach this market nationwide,” says Kulwant Rai, research director at the Tayloe Murphy Center.
On Friday, June 17, Rai will present the study for the first time in Los Angeles at the National Federation of Community Development Credit Unions’ 37th Annual Conference on Serving the Underserved.
In Virginia, the Tayloe Murphy Center found 39,000 unbanked Latino households, with an average yearly income of $23,500. That adds up annually to almost $917 million unbanked by Latino households.
Much of that unbanked money is serviced by community grocery stores and markets, called “Las Tiendas” in the report. Las Tiendas offer check-cashing, wire transfers and bill paying with significantly marked-up service fees.
For answers on how to capture those billions in deposits and provide unbanked households more control of their finances, Tayloe Murphy Center researchers examined a North Carolina-based credit union established in 2000 called the Latino Community Credit Union (LCCU).
LCCU was chosen because its membership is one of the fastest-growing of any credit union in the nation. From 2000 – 2009, the number of LCCU depositors soared from 917 to 53,073. It achieved its success through a strategy that makes Latinos feel comfortable and educates them on how banking services are beneficial.
Researchers found an added incentive in the credit union’s approach to banking; because of their tendency to carry cash, unbanked households, especially Latinos, are often the victims of violent robberies.
“I used to carry my money and hide it in small packets at home. It wasn’t until I was robbed at gunpoint with my son at my side that I realized I needed to put my money in a safer place,” says Roberto Maya, an LCCU member since 2000.
Maya says LCCU representatives made him feel welcome and spoke to him in Spanish. While he was initially concerned about acquiring debt, LCCU provided financial education workshops where he learned how to obtain his first loans.
“At LCCU, they helped me understand how things work and made me feel comfortable,” Maya says. “In the last 10 years, I built my credit history, bought my first home and started a painting business.”
Maya’s experience at LCCU is far from unique.
The Tayloe Murphy Center reviewed statistics from 1990 – 2008 that found each time LCCU opened a branch in North Carolina (in the counties of Durham, Mecklenburg, Wake, Guilford and Cumberland) the number of robberies dropped by an average of 57 per year, almost 4 percent in each county.
Further, the decline in crime led to a dramatic increase in property value in those same counties. The opening of LCCU branches from 2000 – 2008 is credited with raising property values by 4 percent compared to the total appreciation, or $9.8 billion.
“The study is about more than just showing banks and credit unions how to connect to this powerful and growing market,” says Fairchild. “At the Tayloe Murphy Center, we seek to conduct research that can create economic and community uplift and transform underserved areas and groups.”
For more information or to request an interview, please contact Olin Ericksen at email@example.com or call +1 434-979-2678.
Olin Ericksen | Newswise Science News
Drone vs. truck deliveries: Which create less carbon pollution?
31.05.2017 | University of Washington
New study: How does Europe become a leading player for software and IT services?
03.04.2017 | Fraunhofer-Institut für System- und Innovationsforschung (ISI)
An international team of scientists has proposed a new multi-disciplinary approach in which an array of new technologies will allow us to map biodiversity and the risks that wildlife is facing at the scale of whole landscapes. The findings are published in Nature Ecology and Evolution. This international research is led by the Kunming Institute of Zoology from China, University of East Anglia, University of Leicester and the Leibniz Institute for Zoo and Wildlife Research.
Using a combination of satellite and ground data, the team proposes that it is now possible to map biodiversity with an accuracy that has not been previously...
Heatwaves in the Arctic, longer periods of vegetation in Europe, severe floods in West Africa – starting in 2021, scientists want to explore the emissions of the greenhouse gas methane with the German-French satellite MERLIN. This is made possible by a new robust laser system of the Fraunhofer Institute for Laser Technology ILT in Aachen, which achieves unprecedented measurement accuracy.
Methane is primarily the result of the decomposition of organic matter. The gas has a 25 times greater warming potential than carbon dioxide, but is not as...
Hydrogen is regarded as the energy source of the future: It is produced with solar power and can be used to generate heat and electricity in fuel cells. Empa researchers have now succeeded in decoding the movement of hydrogen ions in crystals – a key step towards more efficient energy conversion in the hydrogen industry of tomorrow.
As charge carriers, electrons and ions play the leading role in electrochemical energy storage devices and converters such as batteries and fuel cells. Proton...
Scientists from the Excellence Cluster Universe at the Ludwig-Maximilians-Universität Munich have establised "Cosmowebportal", a unique data centre for cosmological simulations located at the Leibniz Supercomputing Centre (LRZ) of the Bavarian Academy of Sciences. The complete results of a series of large hydrodynamical cosmological simulations are available, with data volumes typically exceeding several hundred terabytes. Scientists worldwide can interactively explore these complex simulations via a web interface and directly access the results.
With current telescopes, scientists can observe our Universe’s galaxies and galaxy clusters and their distribution along an invisible cosmic web. From the...
Temperature measurements possible even on the smallest scale / Molecular ruby for use in material sciences, biology, and medicine
Chemists at Johannes Gutenberg University Mainz (JGU) in cooperation with researchers of the German Federal Institute for Materials Research and Testing (BAM)...
19.06.2017 | Event News
13.06.2017 | Event News
13.06.2017 | Event News
28.06.2017 | Power and Electrical Engineering
28.06.2017 | Life Sciences
28.06.2017 | Awards Funding