There is a huge missed opportunity that financial institutions would do well to address: Less than 2.5% of their collective ad budget is allocated to U.S. Hispanic media.
This is especially surprising considering that Hispanics have a higher rate of adoption of credit cards, auto loans, and mortgages. Some companies have noticed this trend and begun to go directly after U.S. Hispanic consumers, but for the most part, Hispanics remain underserved.
It’s possible banks feel advertising directly to Hispanic audiences is unnecessary, but since Hispanics—especially Hispanic millennials—are the largest drivers of population growth in the United States, this feels more like an oversight.
As mentioned in last week’s article, Hispanics purchase big-ticket items such as automobiles at higher rates than the rest of the general population.
Not only that, but in the period between 2002 and 2012, U.S. Hispanics were responsible for 38% percent of the growth in aggregate consumer spending, according to a Latinum Network study. That's an incredible statistic, considering that the median Hispanic household income remains lower than its non-Hispanic white counterpart.
For financial institutions, especially those responsible for giving out loans to enable people to buy such things as cars and homes, it makes sense to reach out to those audiences most actively engaged in buying such items — in this case, U.S. Hispanics.
According to Simmons Research, in 2017 2.3 million Hispanics were planning on buying their first home within the coming year (2018). On top of that, 1.5 million planned on buying a new home, and 1.3 million Hispanics planned on refinancing their current house. If you add Hispanic auto intenders, then the opportunity for financial institutions seems clear.
But attracting this audience is more complicated than simply putting out an ad. Those companies who are serious about reaching this audience have to raise their cultural cachet among the Hispanic market and build trust. They also have to understand the ways in which Hispanics receive content and particularly how they make decisions about which products or companies to use.
For many Hispanics, recommendations are central to the decision-making process. In a Univision/Harris Poll survey, 27% said that friends and families were their preferred sources of information on finance and/or investments, compared to 23% for non-Hispanic respondents. Hispanics were also more likely to prefer information from their employers, financial and retirement websites, and social media—which is further proof of how important recommendations from trusted sources are.
Hispanics are also a young demographic, and one that tends to start families and buy cars at a younger age than non-Hispanics. Consequently, U.S. Hispanics also have more prime spending years than other demographics. This makes Hispanic millennials in particular the ones to watch, especially as they are the ones who will be driving consumer trends within their demographic as well as the general U.S. population. It is important for financial institutions to start building their relationships with this group as early as possible.
Today, many Hispanics feel undervalued by the financial services industry. As a result, they are more likely to actively search out information about financial services on offer. Providing U.S. Hispanics with the content and media they are searching for would go a long way toward establishing trust, and benefit the financial services industry by connecting them with an audience interested in the services they provide.