Remarks of
Martin J. Gruenberg, Vice Chairman,
FDIC; Inter-American Development Bank;
Conference on Hispanic Immigration
in the United States; Washington, D.C.
October 18, 2006
Good afternoon. I would like to thank Don Terry for his kind introduction and the Inter-
American Development Bank (IADB) and the IADB's Multilateral Investment Fund for
organizing this conference and inviting me to join you this afternoon. I have been asked
to speak today about banking the unbanked initiatives in the U.S., with particular
attention to Hispanic immigrants. I will try to place this issue in context by first talking
about banking opportunities in the Hispanic community in the U.S. I will then discuss
specific FDIC initiatives relating to the unbanked, remittances, and financial literacy.
Finally, I will conclude with a brief discussion of recently released Home Mortgage
Disclosure Act (HMDA) data and what it shows about mortgage lending to the Hispanic
community, and its particular relevance to the issue of the unbanked.
Banking Opportunity in the Hispanic Market
As you know, within the past few years, Hispanics have become the largest minority
group in the U.S. The U.S. Census recently reported that Hispanics accounted for
almost half of the nation's population growth in the year ending July 1, 2005, and the
U.S. Hispanic population is expected to triple in size between 2000 and 2050.1 As the
Hispanic population grows, Hispanic-owned businesses grow with it, averaging three
times the national growth rate for all businesses between 1997 and 2002.2
Clearly, the Hispanic market represents an enormous opportunity for all banks. Industry
analysts have projected that more than half of all U.S. retail banking growth in financial
services during the next two decades will originate from the growing Hispanic market.
The rapidly growing Hispanic population will require financial products to meet their
needs.
A 2004 FDIC study on the banking opportunities presented by the growing Hispanic
market reported that most banks are still in the early stages of developing their
strategies for this market.3 The study identified four key service areas that can assist
banks in targeting services to Hispanics depending on where they are in their financial
life cycle. These are: 1) pre-banking services such as financial literacy and remittances,
2) basic banking services such as checking and savings accounts, 3) advanced banking
services, such as mortgage, personal, and business lending, and 4) affluent banking
services, including higher margin products and services.
Economic Inclusion
While the opportunities are clear, they are not without challenges. Studies have
indicated that a substantial portion of the U.S. population, particularly the Hispanic
Martin J. Gruenberg, Vice Chairman,
FDIC; Inter-American Development Bank;
Conference on Hispanic Immigration
in the United States; Washington, D.C.
October 18, 2006
Good afternoon. I would like to thank Don Terry for his kind introduction and the Inter-
American Development Bank (IADB) and the IADB's Multilateral Investment Fund for
organizing this conference and inviting me to join you this afternoon. I have been asked
to speak today about banking the unbanked initiatives in the U.S., with particular
attention to Hispanic immigrants. I will try to place this issue in context by first talking
about banking opportunities in the Hispanic community in the U.S. I will then discuss
specific FDIC initiatives relating to the unbanked, remittances, and financial literacy.
Finally, I will conclude with a brief discussion of recently released Home Mortgage
Disclosure Act (HMDA) data and what it shows about mortgage lending to the Hispanic
community, and its particular relevance to the issue of the unbanked.
Banking Opportunity in the Hispanic Market
As you know, within the past few years, Hispanics have become the largest minority
group in the U.S. The U.S. Census recently reported that Hispanics accounted for
almost half of the nation's population growth in the year ending July 1, 2005, and the
U.S. Hispanic population is expected to triple in size between 2000 and 2050.1 As the
Hispanic population grows, Hispanic-owned businesses grow with it, averaging three
times the national growth rate for all businesses between 1997 and 2002.2
Clearly, the Hispanic market represents an enormous opportunity for all banks. Industry
analysts have projected that more than half of all U.S. retail banking growth in financial
services during the next two decades will originate from the growing Hispanic market.
The rapidly growing Hispanic population will require financial products to meet their
needs.
A 2004 FDIC study on the banking opportunities presented by the growing Hispanic
market reported that most banks are still in the early stages of developing their
strategies for this market.3 The study identified four key service areas that can assist
banks in targeting services to Hispanics depending on where they are in their financial
life cycle. These are: 1) pre-banking services such as financial literacy and remittances,
2) basic banking services such as checking and savings accounts, 3) advanced banking
services, such as mortgage, personal, and business lending, and 4) affluent banking
services, including higher margin products and services.
Economic Inclusion
While the opportunities are clear, they are not without challenges. Studies have
indicated that a substantial portion of the U.S. population, particularly the Hispanic
immigrant population, lacks access to the banking system and spends significantly more
on financial transactions as a result. One recent study estimated that there are 28
million unbanked people in the U.S., and 45 million underserved people who lack
adequate access to credit.4 These studies further report that a significant portion of the
unbanked population is Hispanic. For example, one study revealed that 34 percent of
U.S. born Hispanic Americans are unbanked, and that Mexican and other Latin
American immigrants have the highest rates of being unbanked among all immigrants.5
Promoting expanded access for all Americans to the financial mainstream is central to
the FDIC's mission and one of our top priorities. Entering and becoming part of the
financial mainstream is in many ways the starting point for economic citizenship in the
U.S. Banking relationships provide individuals with the opportunity to save, borrow,
invest, and build a credit record. It increases their participation in housing and credit
markets which can promote stable neighborhoods and better living conditions.
Promoting economic inclusion is a top priority for the FDIC.
The FDIC's NATF, a project started by our Chicago Region under its National
Coordinator Michael Frias, plays a key role in the FDIC's economic inclusion initiatives.
NATF was launched in 2003 by the FDIC as an initiative to encourage Hispanics and
other immigrants to enter mainstream banking, learn basic financial skills and become
homeowners. NATF has successfully brought Hispanic immigrants into the financial
mainstream by promoting financial education and outreach programs and innovative
banking products. The NATF reaches out to the unbanked by delivering services at
mobile consular sites, free tax preparation sites, supermarkets and bank branches in
high schools. Financial education programs are delivered in churches, job training
centers, housing organizations and community colleges.
As of late 2005, NATF was composed of 65 members including 40 banks, government
agencies, and nonprofit advocacy and community groups in the Chicago and Milwaukee
areas. Moreover, the success of the NATF Chicago/Midwest model led to the initiative's
expansion in 2005 to the FDIC's Atlanta, Boston, Dallas, Kansas City, New York and
San Francisco regions. As a result of these efforts and programs, more than 10,000
people have participated in NATF financial education workshops and more than more
than 157,000 new bank accounts have been opened in the areas where NATF
operates, with more than $100 million in deposits. Also, since NATF was launched,
more than 800 immigrant families have received mortgage loans totaling $100 million.
Looking forward, the FDIC now plans to expand these efforts in a national campaign
focused on the entire unbanked population in the U.S. through the organization of
broad-based coalitions in each of the FDIC's six regions composed of banks,
community organizations, foundations, educators, and local, state, and federal
agencies. Building on our experiences to date, the FDIC will seek to build partnerships
among public, private, and non-profit organizations to bring the unbanked and
underserved into the financial mainstream.
on financial transactions as a result. One recent study estimated that there are 28
million unbanked people in the U.S., and 45 million underserved people who lack
adequate access to credit.4 These studies further report that a significant portion of the
unbanked population is Hispanic. For example, one study revealed that 34 percent of
U.S. born Hispanic Americans are unbanked, and that Mexican and other Latin
American immigrants have the highest rates of being unbanked among all immigrants.5
Promoting expanded access for all Americans to the financial mainstream is central to
the FDIC's mission and one of our top priorities. Entering and becoming part of the
financial mainstream is in many ways the starting point for economic citizenship in the
U.S. Banking relationships provide individuals with the opportunity to save, borrow,
invest, and build a credit record. It increases their participation in housing and credit
markets which can promote stable neighborhoods and better living conditions.
Promoting economic inclusion is a top priority for the FDIC.
The FDIC's NATF, a project started by our Chicago Region under its National
Coordinator Michael Frias, plays a key role in the FDIC's economic inclusion initiatives.
NATF was launched in 2003 by the FDIC as an initiative to encourage Hispanics and
other immigrants to enter mainstream banking, learn basic financial skills and become
homeowners. NATF has successfully brought Hispanic immigrants into the financial
mainstream by promoting financial education and outreach programs and innovative
banking products. The NATF reaches out to the unbanked by delivering services at
mobile consular sites, free tax preparation sites, supermarkets and bank branches in
high schools. Financial education programs are delivered in churches, job training
centers, housing organizations and community colleges.
As of late 2005, NATF was composed of 65 members including 40 banks, government
agencies, and nonprofit advocacy and community groups in the Chicago and Milwaukee
areas. Moreover, the success of the NATF Chicago/Midwest model led to the initiative's
expansion in 2005 to the FDIC's Atlanta, Boston, Dallas, Kansas City, New York and
San Francisco regions. As a result of these efforts and programs, more than 10,000
people have participated in NATF financial education workshops and more than more
than 157,000 new bank accounts have been opened in the areas where NATF
operates, with more than $100 million in deposits. Also, since NATF was launched,
more than 800 immigrant families have received mortgage loans totaling $100 million.
Looking forward, the FDIC now plans to expand these efforts in a national campaign
focused on the entire unbanked population in the U.S. through the organization of
broad-based coalitions in each of the FDIC's six regions composed of banks,
community organizations, foundations, educators, and local, state, and federal
agencies. Building on our experiences to date, the FDIC will seek to build partnerships
among public, private, and non-profit organizations to bring the unbanked and
underserved into the financial mainstream.