Remarks of
Martin J. Gruenberg, Vice Chairman,
FDIC; Symposium on Banking the Latino Market;
Illinois Bankers Association; Oak Brook, Illinois
October 16, 2006
Good morning. I am pleased to be here today to welcome you to this symposium on
banking the Latino market. I would first like to start by thanking Linda Koch for her kind
introduction and the Illinois Bankers Association (IBA) for inviting me to speak here this
morning. I would also like to commend IBA for their leadership in expanding financial
access to the Latino community. This is the IBA's third annual symposium on this topic. I
would like to recognize two individuals here today who have made substantial
contributions in this area - Michael Frias, the FDIC's New Alliance Task Force (NATF)
National Coordinator and its founder, and Manuel Orozco, Director of Remittances and
Development at the Inter-American Dialogue.
Today I would like to speak to you about the importance of the growing Latino market in
the U.S., Illinois, and the Chicago area and several issues relating to the Latino market,
including expanding financial access to the unbanked, remittances, financial literacy,
some significant implications of recently released Home Mortgage Disclosure Act
(HMDA) data, and minority banking.
Banking Opportunity in the Latino Market
As you know, within the past few years, Latinos have become the largest minority group
in the U.S. The U.S. Census recently reported that Latinos accounted for almost half of
the nation's population growth in the year ending July 1, 2005, and the U.S. Latino
population is expected to triple in size between 2000 and 2050.1 As the Latino
population grows, Latino-owned businesses grow with it, averaging three times the
national growth rate for all businesses between 1997 and 2002.2
As I'm sure you are aware, Latino population growth has been even more dramatic here
in the Illinois region than in the nation as a whole. As of 2000, Latinos accounted for
over 12 percent of the state's population and 26 percent of the population of the city of
Chicago.3 A 2004 FDIC study reported that Illinois is one of seven U.S. states with the
highest concentration of Latinos.4
Clearly, the Latino market represents an enormous opportunity for all banks, particularly
banks in the state of Illinois. 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 Latino market. The rapidly growing Latino population will require
financial products to meet their needs.
The 2004 FDIC study also reported that most banks are still in the early stages of
developing their strategies for the Latino market. The study identified four key service
Martin J. Gruenberg, Vice Chairman,
FDIC; Symposium on Banking the Latino Market;
Illinois Bankers Association; Oak Brook, Illinois
October 16, 2006
Good morning. I am pleased to be here today to welcome you to this symposium on
banking the Latino market. I would first like to start by thanking Linda Koch for her kind
introduction and the Illinois Bankers Association (IBA) for inviting me to speak here this
morning. I would also like to commend IBA for their leadership in expanding financial
access to the Latino community. This is the IBA's third annual symposium on this topic. I
would like to recognize two individuals here today who have made substantial
contributions in this area - Michael Frias, the FDIC's New Alliance Task Force (NATF)
National Coordinator and its founder, and Manuel Orozco, Director of Remittances and
Development at the Inter-American Dialogue.
Today I would like to speak to you about the importance of the growing Latino market in
the U.S., Illinois, and the Chicago area and several issues relating to the Latino market,
including expanding financial access to the unbanked, remittances, financial literacy,
some significant implications of recently released Home Mortgage Disclosure Act
(HMDA) data, and minority banking.
Banking Opportunity in the Latino Market
As you know, within the past few years, Latinos have become the largest minority group
in the U.S. The U.S. Census recently reported that Latinos accounted for almost half of
the nation's population growth in the year ending July 1, 2005, and the U.S. Latino
population is expected to triple in size between 2000 and 2050.1 As the Latino
population grows, Latino-owned businesses grow with it, averaging three times the
national growth rate for all businesses between 1997 and 2002.2
As I'm sure you are aware, Latino population growth has been even more dramatic here
in the Illinois region than in the nation as a whole. As of 2000, Latinos accounted for
over 12 percent of the state's population and 26 percent of the population of the city of
Chicago.3 A 2004 FDIC study reported that Illinois is one of seven U.S. states with the
highest concentration of Latinos.4
Clearly, the Latino market represents an enormous opportunity for all banks, particularly
banks in the state of Illinois. 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 Latino market. The rapidly growing Latino population will require
financial products to meet their needs.
The 2004 FDIC study also reported that most banks are still in the early stages of
developing their strategies for the Latino market. The study identified four key service
areas that can assist banks in targeting services to Latinos 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 Latino
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.5 These studies further report that a significant portion of the
unbanked population is Latino. For example, another 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.6
Promoting fair and equal access 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.
The FDIC has been actively encouraging bank involvement in the provision of financial
services to immigrant and unbanked populations through its New Alliance Task Force
(NATF), a project started by our Chicago region. NATF was launched in 2003 by the
FDIC as an initiative to move more remittances through the banking sector and promote
the inclusion of immigrants into the financial mainstream.
Michael Frias will share more with you about these efforts this afternoon. NATF has
successfully brought Latino immigrants into the financial mainstream by promoting
financial education and outreach programs and innovative banking products. 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. 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.
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
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 Latino
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.5 These studies further report that a significant portion of the
unbanked population is Latino. For example, another 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.6
Promoting fair and equal access 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.
The FDIC has been actively encouraging bank involvement in the provision of financial
services to immigrant and unbanked populations through its New Alliance Task Force
(NATF), a project started by our Chicago region. NATF was launched in 2003 by the
FDIC as an initiative to move more remittances through the banking sector and promote
the inclusion of immigrants into the financial mainstream.
Michael Frias will share more with you about these efforts this afternoon. NATF has
successfully brought Latino immigrants into the financial mainstream by promoting
financial education and outreach programs and innovative banking products. 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. 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.
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