How Financial Institutions Can Build Long-Term Relationships with Immigrants Before and After Immigration Reform

Immigrants, like all consumers, need access to high-quality financial services that meet their day-to-day transactional needs and set them up for long-term financial success. With approximately 40 million immigrants residing in this country, comprising nearly 13 percent of the total U.S. population, the opportunity to serve this growing community has never been greater. The prospect of a comprehensive reform of the United States immigration system presents banks, credit unions, and other financial service providers with a unique opportunity to develop high-quality products for the more than 11 million undocumented immigrants currently residing in the United States Providers that succeed in reaching these individuals at a pivotal moment in their financial lives are likely to reap the benefits of loyal, engaged, and long-term customers. As such, financial institutions should not wait for the passage of immigration reform to serve these consumers. They should act now by developing foundational products like credit-building loans and “legalization and citizenship loans,” as well as basic transactional, saving, and credit services that put immigrants on the path towards long-term financial health. The following strategies provide a roadmap for banks, credit unions, and other financial service providers to serve immigrants both now and after comprehensive immigration reform has passed:

1. Understand the needs of immigrants within the institution’s footprint.

Financial service providers should strive to understand the needs of immigrants within the areas they serve. Providers must look beyond obvious demographic characteristics, like country of origin and native language, to other characteristics, like individuals’ level of acculturation and approximate life stage, to more accurately assess and understand the needs of their customers.

2. Ensure that Customer Identification Programs do not exclude undocumented immigrants.

The USA PATRIOT of Act of 2001 allows banks and credit unions to serve individuals without a Social Security Number through comprehensive alternative identification programs. Financial institutions should ensure that their legal and compliance teams understand which types of identification are acceptable under current law and that front-line staff are sufficiently trained in these policies.

3. Develop products that meet immigrants’ immediate financial needs.

When comprehensive immigration reform is passed, many undocumented immigrants will need an array of basic products that will help them establish a foothold in the United States. Financial institutions should consider offering credit-building tools that allow individuals to establish credit histories as well as legalization and citizenship loans that help them cover the costs associated with applying for legalization. Such products will signal to immigrants—both legal and undocumented—that financial institutions are interested in their business, which in turn may lay the groundwork for profitable relationships in the long run.

4. Offer products that meet consumers’ day-to-day financial needs and set them up for long-term financial success.

Immigrants, like all consumers, need access to financial products that allow them to manage their day-to-day financial lives with ease and set them up for success over the long run. Financial institutions should offer basic transactional services, including checking accounts and remittance services. They should also offer savings accounts and short-term loans that provide customers with a financial cushion in case of an emergency. Providers who succeed in serving customers with these basic products will be well positioned to offer them additional services—such as long-term savings vehicles, small business loans, and mortgages—as their needs evolve.

5. Distribute products through channels that are likely to reach immigrants.

Financial institutions should partner with trusted community organizations to market and deliver services in places where immigrants are likely to live, work, shop, and worship. Like many consumers, immigrants are increasingly using smart phones to conduct their financial business, so providers should explore ways to deliver financial services through mobile channels as well. Developing and improving mobile channels—likely part of a financial institution’s broader strategy—offers particular value to immigrant consumers who tend to have higher rates of smart phone ownership than the general U.S. population.

6. Provide high-quality customer service.

Many immigrants learn of financial services from friends and family, so banks and credit unions should ensure that their customer service is top-notch. Financial institutions should not only employ bilingual staff as front-line tellers and customer service representatives, they should also ensure that all staff are trained to assess and adequately respond to the diverse needs of the customers who walk through their doors.

7. Pursue credit under the Community Reinvestment Act.

Services that meet the needs of low-income immigrants can also help banks improve their Community Reinvestment Act (CRA) ratings. Banks can earn CRA credit by offering lending services like affordable personal loans and mortgages, making investments in organizations not traditionally served by financial institutions, and maintaining bank branches in low- and moderate-income neighborhoods.