Banks Move Into Ethnic Markets

October 12, 2004
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GRAND RAPIDS — With West Michigan a frequent choice of new immigrants from across the world, the economy of the region is taking a parallel course to its population, and local banking institutions are poised to serve those groups as their buying power rapidly grows.

“The buying power of the minority community is huge in West Michigan,” explained Armando Hernandez, Bank One vice president of community affairs and West Michigan Community Reinvestment Act (CRA) manager.

“The Asian community is growing by leaps and bounds, while the Hispanic community is growing all over the place. When I moved here 20 years ago, I had to drive across town to buy tortillas; now I can walk from where I lived then to five or six places. And the African community as well is making inroads in buying power.

“We as citizens need to make sure that we’re servicing this community.”

While all banks strive to treat all of their members in the same manner, many recognize that extra initiative must be taken on the part of the institution to ensure access to these communities, and after that, to be competitive within them.

Most banks have adopted a two-prong approach, combining resources both internally and externally.

“Part of it is trying to hire folks that are diverse, to have that ability to speak Spanish not only at the call center but also at the branch desks and everywhere else,” said Pat Lonergan, vice president of community affairs for Fifth Third Bank of West Michigan.

“It’s just critical. The population is changing so rapidly and the Hispanic segment is growing so quickly and the Asian segment is growing so quickly. While many of them might understand English, many would prefer to speak their own language.”

As Hernandez adds, it is only natural for an individual to want to speak in the language he or she is most comfortable with, especially when dealing with important and complex topics like personal and professional finance.

“We have a lot of business owners and individuals who, even though they speak English, still feel more comfortable discussing financial terms in their native tongues,” he said. “Financial terms make more sense in your native tongue.”

While it is important to have employees that are bilingual, that may not be enough by itself.

“You need to have people that are not only bilingual but bicultural as well,” Hernandez said. “Because there may be one interpretation in the Hispanic or Asian culture and a different interpretation in another.”

One common example of cultural confusion that Hernandez comes across is co-signing.

He explained that, many times Hispanic clients do not understand that cosigning on a loan is more than a character reference — that it holds the cosigner accountable for the repayment of the loan.

Likewise, many migrants do not understand the importance of credit.

“There are many people in the Hispanic community that do business only on a cash basis,” Hernandez said. “And that’s okay; I would rather be paid in cash, too.

“But when it comes to the larger projects — and you need capital to finance your dream — if you’ve never been in business and have no credit, that is going to be a very big hurdle.”

Bank One attacks these issues through classes in the community presented through a variety of groups, including the Hispanic Chamber of Commerce.

Fifth Third also is heavily involved in education, having conducted 124 classes so far this year for nearly 2,500 people across its 23-county area.

“Once you hire the right people,” Lonergan said, “then you can go about developing the right relationships; letting people know that you are out there in the community wanting to do business and to make loans.”

“As a lender, we’ve had the opportunity to leverage off of Pat (Lonergan)’s work in the community and with CRA,” said Ed Ryan, senior vice president and commercial real estate manager at Fifth Third. “When he hears of a project, we’re able to be right there. And we’ve been able to stay in contact with developers over time. We’ve been able to engage people like Roosevelt Tillman and Benjamin Khuu.”

Through its community advisory board, Fifth Third was able to establish relationships with businessmen with strong ties to the community like Tillman and Khuu.

Tillman, of Tillman Construction, has been passionate in his development of the South Division corridor, one of the area’s most diverse regions. One of his current developments, the conversion of a long vacant building on South Division at

Pleasant Avenue
into a Hispanic shopping center, bears a “financed by Fifth Third” marker.

Khuu, of First Choice Financial Group, has provided parallel inroads to the Asian community.

Bank One, meanwhile, has taken a special interest in the Hispanic community, especially that represented by the Garfield Park Neighborhood Association. Through their community forums, the West Michigan Hispanic Chamber of Commerce was formed.

“I was invited to start talking with them about the problems the Hispanic community faces,” Hernandez said. “And we sat down and decided that what we needed was an organization that speaks for the Hispanic business community.”

That organization has since grown to 70 members and recently presented its first Business Expo, which was sponsored by Bank One.    

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