America’s demographics are shifting, and credit unions have a decision to make: Invest in ways to support culturally diverse communities or risk being left behind. For Iowa’s GreenState Credit Union, there’s only one right answer.
Financial inequity: a racial issue
America has an inequality problem. Just like the food we eat, the institutions we bank with are crucial to our health and well-being.
More than 6,500 communities, both urban and rural, live in food deserts with no access to affordable, healthy food. We might think that it’s easy to find a McDonald’s in every American town or city, but in the US, there are actually more payday lenders than McDonald’s restaurants. Just as low-income communities may experience limited access to grocery stores, they can also find themselves without a trusted financial institution in their zip code.
“Just as we have food deserts, we have financial deserts,” GreenState Credit Union’s Kenia Calderon Ceron, VP, Bilingual Business Development Director, said. “What you see in low-income and generally underbanked communities are pawn shops and payday lenders on every single corner.”
Financial deserts disproportionately affect immigrants and people of color. A report from the Iowa Policy Project found that 24 percent of black Iowans are entirely unbanked compared to Iowa’s statewide rate of 4.5 percent. Iowa has the sixth-largest housing gap between Black and White Americans in the US — in Polk County, 73.7 percent of white residents own their home, compared to 49.7 percent of Latino residents and just 2.6 percent of black residents.
For GreenState Credit Union, these gaps represent an opportunity to live its mission.
If the system is broken, fix it
GreenState Credit Union, an Iowa-based credit union that serves the Midwest, is looking to turn those financial deserts into financial oases. In 2022, GreenState pledged one billion dollars in mortgage loans for people of color, aiming to meet their goal in 10 years. Along with this investment comes a homeownership assistance program, helping qualified buyers of color purchase their first home.
They also began to revamp their loan approval process to become immigrant-friendly, hiring multilingual loan officers, accepting alternative forms of ID (such as ITINs), and translating GreenState’s website to Spanish.
These changes were necessary to capture the faces of an ever-changing America. In 2021, the US Latino population reached 62.5 million, accounting for 19 percent of the nation. Now Latinos represent the fastest growing demographic in the country. In the Midwest, Iowa has seen a 162 percent increase in Latino residents over the last 20 years.
For GreenState, this means creating more strategies to reach this growing community.
“We only have one opportunity to make the first impression among our Latino and immigrant communities,” Calderon Ceron said. “If our goal is to be the preferred financial institution for Latinos within our field of membership, and to do so we needed to go all in. Our actions needed to match our words.’”
Going all in: Inclusion as a long-term growth strategy
Since January 2021, GreenState has approved $443 million dollars in mortgages for underserved communities. They have also captured 45 percent of their total membership’s language preference and have done $158 million dollars in total production among non-English preferring members.
“Once we did something well for one family member, they told every single person in their family,” Calderon Ceron said. “Positive word-of-mouth grew our membership. That started by looking at a comprehensive strategy to ensure we had a great membership experience.”
To capture Iowa’s underbanked communities, GreenState also aims to develop their very own microloan product with Zest AI, a fintech company combating financial inequity through AI-automated underwriting. Members will be able to access these microloans at GreenState’s Financial Resource Center, located in the lowest-income zip code in Des Moines — a financial desert. The center is expected to open in 2024, offering the chance at a financial oasis away from the summer heat.
Amy Henderson, GreenState’s Chief Consumer Services Officer, is hopeful that microloan applicants will soon move into traditional credit or may already be qualified for traditional credit. “Our goal isn’t to gain anything from that portfolio. Our goal is to take someone that may need a microloan initially, grow their credit history, and then move them into traditional credit sources like an auto loan,” she said. “If we can move along that journey, then that’s where we can make the biggest impact. That would be so special.”
The business case that makes itself
Ultimately, GreenState’s efforts to embrace and engage its increasingly multicultural community is expanding its membership and growing its portfolio while creating real change in members’ lives.
“There is a business case to what we’re doing, and there is the social responsibility we have for the people in our field of membership. We want to improve the financial lives of our members. That includes looking at the communities that have been traditionally excluded and then including them for the future of our cities as well,” Calderon Ceron said.
Turns out, going “all in” pays off. GreenState can reach more members, grow their bottom line, and manage long-term strategies, all while helping those members accumulate wealth for generations to come.
“I enjoy seeing the results. Someday when I retire I will be proud to look back and know that I played a role in this initiative” Henderson said. “When my career is over, I will be proud to look back and know that I played a part in this initiative.”
Register now for Workshop 2023
Credit unions that are looking to engage with new audiences for sustainable and long-term growth should register for The National Credit Union Foundation’s Workshop 2023. This immersive experience is directly linked to financial well-being for all as it encourages folks to understand the demographics of their field of membership and the steps all credit unions can take to better serve Hispanic communities across the country.