Hispanics Unbanked: Understanding Hispanics’ Financial Services Usage

The mandate to drive sales and build loyalty among Hispanic consumers is felt across all industries. This is felt acutely in the financial industry. Driven by economic, cultural, and language factors, Hispanic consumers significantly under-index on banking status and financial products usage. This represents not only a huge business upside for financial services companies, but also a human opportunity in emboldening and increasing access to historically underserved Hispanic consumers.

With a complicated, sensitive product line, financial services have a distinct and difficult marketing journey in front of them in the Hispanic market, but the growth story is clear: U.S. Hispanics are growing faster in population and adding more incremental dollars to the economy than any other segment. Put simply, Hispanic consumers are the future of the American middle class.

Our latest white paper, Hispanics and Financial Services explores the U.S. Hispanic financial services opportunity and details the demographic, economic, cultural, and language features that are must-knows for all service-based organizations. Here are three highlights from the white paper:

Hispanics’ Current Banking Status and Financial Products Usage

Hispanics are less likely to be fully banked. To unpack this, let’s examine the Federal Deposit Insurance Corporation’s (FDIC) two classifications of lower banked status:

  • Underbanked: has at least one account, but also used non-bank, Alternative Financial Services (AFS) in the last year (e.g., pay-day loans, money orders, etc.)
  • Unbanked: does not currently have a checking or savings account

A 2013 FDIC report detailed the extent of the financial service under-index: 28.5% of Hispanics are underbanked and 17.9% are unbanked. By comparison, these rates for the total population were 20.0% and 7.7%, respectively.

However, these figures are trending positively. Hispanic’s current (2013) 17.9% unbanked rate is down from 20.1% in 2011.

hispanic-financial-products-penetration-tableThe Hispanic under-index is felt across most financial services products especially more “advanced” investment and insurance products. According to Simmons National Hispanic Consumer Survey, in 2014 52% of all Hispanic adults say they “own no investments” vs. 38% of non-Hispanics. This gap remains after controlling for income.

Looking only at individuals in households making more than $75K annual income, the share of Hispanics with no investments drops slightly to 46% of Hispanics, while non-Hispanics falls more drastically to 28%.

Additionally this under-index extends across most financial products. From credit cards to homeowners insurance to 401(k)s and IRAs, Hispanics under-index even after controlling for income.

Hispanic “Youthfulness” & Lifetime Value

In 2013, for the first time ever, the Census Bureau reported that non-Hispanic White deaths exceeded births in 2012. This eye-opening stat is the result of long term demographic shifts. he Hispanic population is younger than the total population. The U.S. Hispanic median age is 27, a full 15 years younger than the median non-Hispanic White age of 42.

For financial services organizations, this demographic fact is even more powerful when seen in conjunction with life-expectancy estimates. After subtracting median age from average life expectancy, we see Latinos have 19.8 more years of effective buying power than non-Hispanic Whites. At an average of 56.5 years, Hispanics lead the way in years of effective buying power against Asian-Americans (52.3 years), African-Americans (42.3 years), and non-Hispanic Whites (36.7 years).

On average, Hispanics are at an earlier life-stage than other consumer segments. Many are entering adulthood, where formal banking and service relationships are solidified. The impetus is greater than ever to understand and educate this traditionally underserved Hispanic population.

Language Choice in Hispanic Focused Financial Services Marketing

One of the most frequently asked questions marketers ask when focusing on U.S. Latinos is, “What language should I advertise in? The U.S. Hispanic population is increasingly bilingual: 40% of adult Hispanics are truly bilingual: they read and speak English and Spanish fairly or very well.

The Spanish vs. English vs. Spanglish language choice is paramount, particularly for financial service organizations, due to the complicated and complex nature of their product portfolio and the educational component to marketing efforts.

To aid in marketing language decisions, we developed the Adaptive Language Strategies Framework. The first step in the framework is understanding the nature of your category. Then, you consider the functionality and emotionality of your category.
hispanic-marketing-language-decesion-criteria-arrowsGenerally, English works better for functional categories while Spanish tends to work better for emotional categories.

For the highly functional financial services industry, we generally recommend English due to the necessity of clear communication and explanation of benefits (especially considering many foreign-born Hispanics grew up in a different financial system). However, that is not to say Spanish can’t is off limits. Check out our white paper to learn how to make that informed decision.

The second consideration is the height of the metaphorical trust barrier. Higher trust products, like banking, require more “investment” from the consumer. A bad financial “purchase” is far more detrimental than having to return an ill-fitting shirt. On top of this, we have found that Hispanics are often suspicious about financial scams in Spanish.


Reducing the Hispanic financial products under-index is crucial to the Hispanic segment’s long-term health. The under-index represents both a huge business opportunity for financial services companies, but also a human opportunity. As the companies that move unbanked Hispanics to underbanked and eventually to fully-banked will win on the balance sheet, maybe, more importantly, they will empower and enable Hispanic consumers on the individual level.

For more on U.S. Hispanics and financial services, including cultural considerations, financial products usage, and mobile banking, please download our full Hispanics & Financial Services white paper!


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