Right now, our society is able to enjoy the benefits of the digital era: we can stay connected, and also have access to a ton of services (like banking services).
Still… there are some social groups, such as Hispanic households, that do not have access to banking services so easily. This info is demonstrated by the latest survey conducted by the FDIC (Federal Deposit Insurance Corporation), which indicates that 12% of Hispanic households do not have a bank account.
In this article, we will see the reasons why so many households do not access banking services. And of course, we will present as an alternative and solution, the option of financial technology companies (Fintech).
SO… WHY IS IT THAT MORE THAN 12% OF HISPANIC HOUSEHOLDS DO NOT HAVE A BANK ACCOUNT?
We’ve grouped those reasons into two main groups:
The consumer’s perception about conventional banking requirements
This perception plays a big role when it comes to deciding whether to join the banking system or not… being the distrust in banks one of the main perceptions amongst the Hispanics.
This mistrust is explained by the presence of some barriers, such as the minimum balance requirement, and fees that banks take, in order to keep the account open.
Then, there are those high ATM commissions, the fees for international transfers… this is a big obstacle for Hispanic families with low incomes, or families that need to save as much as possible.
If only those unnecessary commissions disappeared, there would be more integration into the banking systems, right?
Another barrier to accessing banking services is how difficult it is to comply with all the requirements requested by the banks. Also, the process tends to take a lot of time, and it can get super complicated and chaotic. This, of course, is NOT a great experience for the Hispanic user.
All of the main traditional banks have as a requirement that you need to have a social security number (SSN) or tax identification number (ITIN), preventing access to Hispanic users who are in the process of getting their status of residence or who do not have it just yet.
Finally, we can confidently say that customer support and the language barrier are not super exciting stuff for the Hispanic user.
Traditional banking services and the VERY FEW benefits to Hispanic households
No, this is not the title for the latest Harry Potter movie, this is a reality: according to the 2020 Census in the United States, the Hispanic community represents 18.4% of the US population and 17.3% percent of the country's workforce. The future of this country would be Hispanic, since it is estimated that by 2060 the Hispanic population will be more than 30%.
The Hispanic community is inserted more and more into economic participation by creating companies (motivated by its entrepreneurial spirit) and qualified occupations are increasing.
However, it is not enough, and they face many barriers and few benefits from banking and financial services on a daily basis.
According to the survey conducted by the international research and data analysis firm, YouGov, Hispanic customers pay almost twice as much for banking services as white customers. This includes the use of ATMs, overdraft, and some other procedures… isn’t that crazy?
This distinction and disadvantage not only means that 12% of Hispanic households do not want to access banking services, but also that the other large percentage that already have access to a bank account feel like their needs are not met and that they are in disadvantage… and with good reason to.
The Hispanic community also faces discrimination in their search for financing that could help them start and expand their businesses: they are less likely to qualify for a loan.
All of this is happening despite the fact that there are millions of Latino businesses that contribute to the US economy: more than $800,000 million dollars annually according to a report released by three groups of legislators in Congress at the end of 2021. I mean, that’s kind of a lot.
FINTECH: A NEW ALTERNATIVE AND SOLUTION FOR HISPANIC HOUSEHOLDS' ACCESS TO FINANCIAL SERVICES
As a response to these difficulties experienced by the Hispanic community, Fintech (Financial Technology Companies) appear as a solution and alternative. They represent a before and after of traditional banking that ACTUALLY meet the needs of Latino users.
Through technology, it offers a true connection with the user and a speedy service: these are its greatest strengths.
And the best part: it is no longer necessary to go to a physical entity and stand in queues that sometimes (if not always) end up in a poor service.
Unnecessary fees and inefficiencies in the financial services system are no longer a problem for Hispanic users accessing
Fintech companies, because these fees are minimal compared to traditional banks.
Fintech companies like h.way can offer a wide range of services: from debit accounts, to sending money to family and friends, to paying bills… and even advancing payroll.
All kinds of useful services and tools that can help Latino users manage their money and get greater benefits.
Opening an account in h.way is very simple: you can forget about those requirements and restrictions that can sometimes be discriminatory. Only a valid U.S. driver's license or a consular license plate is required.
The connection that h.way has with the Hispanic community is sincere, since its founders are Latinos. They understand the difficulties their community face, so they can correctly satisfy their needs for access to banking and financial services.
Financial technology companies such as h.way are a new alternative and an efficient solution to the unfortunate percentage of 12% of Hispanic families that do not have a bank account.