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Latino Community Credit Union Brings Full Service Banking to Latino Immigrants in North Carolina
North Carolina has more than 500,000 Latinos and the fastest growing Latino immigrant population in the United States. More than half of these immigrants report speaking English poorly and three quarters of them do not have bank accounts. As a result, they are overcharged for services like loans, check cashing, money orders and remittances and have become targets of home invasions because of their need to keep large amounts of cash at home.
Latinos, especially newer immigrants, must surmount numerous hurdles to use the American banking system—lack of documentation, distrust of banks, language issues, and poor financial literacy. The Latino Community Credit Union (LCCU) was founded to address the financial needs of this growing immigrant population, with the help of Latino leaders, the North Carolina Minority Support Center, credit union activists at Self-Help Credit Union and the State Employees' Credit Union, and leaders of El Centro Hispano, a leading Latino advocacy organization in Durham. In 2000, the LCCU received its charter from North Carolina and opened its first branch in Durham. It has opened another four branches since, in Charlotte, Raleigh, Greensboro, and Fayetteville. It is the first fully bilingual financial institution in the state. Currently, the LCCU has 45,000 members and assets of $35 million. Ninety-five percent of its members are low-income and 75 percent are first time banking users.
The challenge faced by the LCCU was how to bridge the language and cultural barriers preventing Latino immigrants from availing themselves of the banking system. What services would they provide and how? How would they overcome immigrants' fears? How would they improve financial literacy and promote financial independence and savings?
The founders of the LCCU believed that a credit union was the institution of choice to meet this challenge. Credit unions pool the money deposited by members who vote for the leadership of the institution and share in its ownership. Credit unions are non-profit institutions dedicated to educating their members and meeting community needs. The LCCU met those needs by improving access to services, designing services to facilitate member use, and promoting financial literacy.
Greater Access to services
The LCCU's mission is to serve those who have not had bank accounts and who have been excluded from the US financial system. Accordingly, the LCCU accepts official government-issued photo identification in opening accounts. It accepts social security numbers and individual tax identification numbers as well as temporary U.S. visas and Matricula Consular identification cards issued by the governments of their home countries. It allows members to open non-interest bearing accounts without an SSN or ITIN, and does not inquire about its members' immigration status. LCCU extends loans to members without a credit history and helps them establish a credit history with credit-builder loans. Contrary to popular perception, it has found that immigrants, many of whom are obtaining loans for the first time, have an outstanding repayment record. The LCCU minimizes its losses further by servicing its members' loans proactively and addressing any delinquency issues early on.
Design of services
The LCCU designed its operations and products with a Spanish-speaking immigrant population in mind. All of LCCU's employees are bicultural and bilingual in English and Spanish. Most are immigrants themselves and are trained to help first time banking customers navigate the system and its requirements. All forms and policies are available in English and Spanish. The marketing outreach done by the LCCU is in partnership with trusted community organizations, such as churches and Latino community centers.
Promotion of financial literacy
One of the cornerstones of LCCU's mission is to improve the financial literacy of its members. LCCU has established a financial education program with the help of the National Endowment for Financial Education. LCCU teaches free financial education classes in Spanish. Approximately 2000 people per year now attend these classes. Classes cover essential topics such as how to manage accounts, how to save money and develop a budget, how to build credit, how to buy a car, and how to buy a house. There is also a class that introduces members to taxes. The classes are offered twice a month at each of the five branches. They are also taught at work sites, churches and local community organizations. On a more fundamental level, all LCCU employees are trained to educate members on banking basics such as ATM use, filling out withdrawal and deposit slips, and balancing checkbooks. Loan officers similarly instruct members on how to build credit, read a credit report, and correct any errors they identify in the report. In 2006, the LCCU launched a new financial literacy program that rewards members who attend seven classes with a graduation "ceremony." Twenty-one members graduated in the first quarter of 2006.
· Address the Paucity of Banking Services for Latino Immigrants Head-On. Where possible, try to convince traditional banks to provide services to immigrants that are sensitive to access issues. The goal is to improve access to banking services, by all means possible. When those efforts are insufficient, create an institution to meet the needs of low-income, low English proficient immigrants. The LCCU created such an infrastructure with the help of other credit unions such as the North Carolina State Employees' Credit Union, which provides back office support to LCCU for a percentage of gross income, and the Self-Help Credit Union and large area financial institutions and employers such as Duke University. The LCCU is now recognized as a national model and consults extensively with other credit unions and activists.
· Put Yourself in the Shoes of Latino Immigrants. The most effective means of providing quality services to Latino immigrants is to imagine the obstacles immigrants face and to develop programs and approaches to minimize or eliminate those obstacles. Bilingual employees, immigrant employees, financial literacy classes in Spanish, translated forms, and hours of operation that accommodate typical work schedules make it possible for Latino immigrants to avail themselves of banking services at the LCCU without fear.
· Be Creative. The LCCU is constantly innovating, thinking of new ways to reach out to North Carolina's growing low-income Latino population to improve its fiscal health and prospects for the future.