| Return to
Community
 By
Thomas P. Johnson Jr.
Immigrant banking offers one way
for large institutions to reconnect with communities.
Last year, we observed that banking
"largely remains a look-alike industry, with many
CEOs still trying to be all things to all customers and
all shareholders." In that context, it's heartening
to see some major U.S. institutions differentiate themselves
by marketing to the nation's immigrant communities. Now
it will be up to these companies to demonstrate the full
measure of responsiveness needed to succeed in these markets.
Given the distinctive cultural, linguistic
and economic aspects of Asian and Hispanic communities,
a major commitment is required to serve them well. Along
with specialized resources, financial services providers
face the challenges of capacity reconfiguration and cultural
adaptation. Requirements include bilingual representatives
and transaction materials, along with tailored marketing
campaigns and products.
It is ironic that this push into ethnic
marketing is essentially a return to an old idea: community
banking. The mega-banks often strayed from this orientation
during the 1990s merger frenzy, which emphasized efficiency
through consolidation. Many local customers became alienated
as decision-making power gravitated to far-off cities
and personal service declined. Not surprisingly, grass-roots
institutions picked up market share with a vengeance.
Immigrant banking, with its strong group
orientation, offers one way for large institutions to
re-connect with communities. This is a market, after all,
where people are often better approached not as isolated
individuals but as members of a group, through their organizations
and cultural events. When Mexican-Americans gather for
Cinco de Mayo, for example, part of what they are celebrating
is their sense of community. By adapting to this orientation,
institutions can serve individuals more meaningfully.
None of this will come easy for large
organizations geared to serve individuals from standardized
platforms. The specialized service required for immigrant
markets is expensive, and some new relationships initially
may be of low profitability. There are also some unique
risk management issues involving verification of identities.
It is commendable that institutions
such as Bank of America Corp., Wells Fargo & Co. and
Citigroup Inc. have stepped up to this challenge. Although
they remain broad-based, generalist institutions, at least
in this area they have made a commitment to stand for
something — to serve a clearly-defined market in
a comprehensive manner. Both BofA and Citigroup, for example,
have gone so far as to link up with Mexican banks to develop
electronic remittance transfer programs.
The resurgence of community banks in
recent years suggests that centralized banks have lost
ground in meeting the unique requirements of local customers.
Perhaps the lessons learned in immigrant banking will
help sensitize the larger institutions to the economic
and social needs of domestic "communities,"
be they geographic or formed by the bonds of common interest.
Mr. Johnson
is publisher of Banking Strategies
and president and chief executive officer of BAI.
Copyright © 2003 by Banking
Strategies, published by BAI.
back
to top |
