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Industry takes on bankless task: But someone's got to build trust with those who lack accounts, finance officials say.
[November 16, 2006]

Industry takes on bankless task: But someone's got to build trust with those who lack accounts, finance officials say.

(Fresno Bee (CA) (KRT) Via Thomson Dialog NewsEdge) Nov. 15--Just 40% of Mexican immigrants who are household heads have checking or savings accounts, according to a recent report.

Financial institutions in the central San Joaquin Valley want to change that, and about 100 representatives from 15 banks and credit unions met in Fresno on Tuesday to talk about how.

"I can't imagine a more untapped market than Fresno and the Central Valley," said Joy Hoffman, a vice president at the Federal Reserve Bank of San Francisco, which was among the organizations that sponsored "Exploring the Valley's Unbanked Opportunity" at the Fresno Convention Center.

Nationwide, 63% of all immigrant households have a checking account, versus 76% of households headed by people who were born in the United States, according to "Financial Access for Immigrants," a report by the Federal Reserve Bank of Chicago and The Brookings Institution.

The reasons why immigrants and others don't use banks vary, according to the report handed out at the event.

Some use check-cashing businesses, despite higher fees, because they are open beyond working hours. Bank workers who don't speak customers' languages are also a barrier.

And minimum-balance requirements often prevent potential customers from opening accounts.

Identification can also be a problem for undocumented immigrants. Some banks allow the use of an Internal Revenue Service-issued individual taxpayer identification number instead of a Social Security number.

However, the mere mention of the IRS is enough to scare some away because they associate it with the U.S. Immigration and Customs Enforcement, said Lena Robinson, regional manager of Northern California Community Development for the Federal Reserve Bank of San Francisco.

"That's a very real and grounded concern for this community," she said.

And perhaps one of the biggest barriers is a lack of trust in banks.

Many people living in Mexico don't use banks, and some have had bad experiences with them, said Dennis Woods, CEO of Fresno-based United Security Bank.

"If you didn't grow up trusting banks ... why would you come across the border and decide it's OK?" he said.

And some might not be familiar with banks, said Sarah Scott, a County Bank vice president who recalled a conversation with a recent immigrant.

"He himself came from a jungle, and there were no banks at all," she said. "They were bartering."

Much of the day focused on ways banks were trying to attract customers who don't use banks.

"The purpose today was for banks to think more broadly about what they could be offering," Robinson said.

Many banks have already started tailoring the way they do business to attract first-time customers.

Some programs presented Tuesday include:

United Security Bank's Promesa Latina program, which allows customers to open checking accounts, build credit, get overdraft protection and transfer money to a partner bank in Mexico.

Wells Fargo ATMs that offer text in Spanish or the White Hmong dialect.

A Berkeley-based nonprofit group that has partnered with worker advocate groups to test a prepaid debit card pilot program allowing users to make purchases, get cash back at retailers and send money to families in other countries at reduced fees.

At the end of the day, several participants said they discovered ideas they could take back to their own banks.

Denise Ferdinand of Bakersfield, product manager at Rabobank, said she liked what one speaker said about reaching out to farmworkers as potential customers during their lunch breaks on farms.

"We advertise, but we try to bring them in to us," she said. "We don't actually get out there and get in the fields."

The reporter can be reached at [email protected] or (559) 441-6431.

Copyright (c) 2006, The Fresno Bee, Calif.
Distributed by McClatchy-Tribune Business News.
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