A current hot topic in politics is immigration. For hundreds of years, people have been coming to the United States for hundreds of different reasons. But politics and history aside, people keep moving to the United States, and these people earn and spend money, and have to make financial decisions. For someone in a new place with unfamiliar financial systems, this can be daunting. Noticing an ever-growing need for financial education and resources to be available to people from a myriad of socioeconomic, cultural, and language backgrounds, the CFPB conducted a field scan of financial education programs available to immigrant populations. The resulting report makes clear some of the financial challenges that many immigrants face.
As this report is a strong indicator of the direction the CFPB is heading, it serves as a good reminder to check your institution’s efforts and preparation to work with and educate immigrant consumers. This is a good idea for everyone, but if your institution is in an area with a high immigrant population, it is particularly important to look ahead and learn how you can improve customer/member reach and service.
Challenges Immigrants Face
Many low- and moderate-income persons find it challenging to build financial well-being. However, the challenges of being an immigrant combined with the challenges of low- to moderate-income socioeconomic status makes life even more difficult. The CFPB found that these challenges correlated strongly with knowledge and understanding of the financial system, trust in financial institutions, and experience with financial products.
Misunderstandings about fees and minimum balance requirements led many immigrant households to mistrust and express frustration with financial institutions. These feelings suggest that many immigrant consumers feel more comfortable paying a check casher than managing a bank account with minimum balance requirements and fees. Findings also support the belief that check cashers may have more convenient hours and locations and are more likely to have bilingual staff.
Because these people are new to the United States, credit reporting companies typically have not yet compiled a credit history on them. That means that many immigrants have a “thin” credit file or no file at all. For those who were able to get credit, a limited understanding of the features of the products and the information about managing credit and debt further damages their ability to obtain future credit. However, this challenge extends beyond personal credit. According to the Small Business Administration, approximately one in 10 immigrant workers owns a business. Again, lack of credit history and information makes it difficult for these immigrant business owners to borrow beyond personal credit cards and loans.
Many immigrants are unaware or uninformed about the documentation requirements for opening an account at a financial institution. Many believed opening a bank account required a Social Security number or a driver’s license, when in fact, some institutions accept foreign passports, consular IDs or other alternative forms of identification.
The above challenges become even more difficult for individuals who have limited English proficiency. Financial disclosures and other documents may only be available in English and many institutions do not have bilingual employees, particularly for languages other than Spanish. When financial education materials and documents are provided in other languages, they are often translated from English to their literal foreign language equivalent, which can be difficult to understand or even unintelligible for the reader. Language challenges also can cause immigrant consumers to be more susceptible to scams and deceptive practices.
Challenges Financial Educators Face
Many of the challenges faced by immigrants correspond to challenges faced by financial educators. Immigrant populations are difficult for financial educators to reach because immigrants, especially those who lack documentation, may not trust offers of help coming from outside their social networks. In addition, many immigrants work nonstandard hours and it may be difficult for financial institutions to offer education programs tailored to nontraditional schedules.
Perhaps the biggest challenge faced by financial educators is the language barrier. Finding and producing financial education materials in a variety of languages is difficult, especially for less common languages. Translations are often difficult and require expertise to be effective. Finding, hiring, and retaining bilingual and bicultural staff is also difficult.
- Outreach and Awareness Campaigns
- Using awareness campaigns and mass media to give immigrant populations information about U.S. financial institutions and trustworthy sources of financial education for those seeking financial education.
- For those who would not otherwise seek financial education, some organizations have been effective in using “edutainment” with embedded educational content to reach immigrant communities.
- Financial Education Programs
- Financial education can be offered through classes or individualized coaching. These services are often tailored to meet immigrant needs.
- An essential part of increasing financial awareness for consumers who have limited English proficiency is providing language-accessible materials.
- Many organizations implement Individual Development Account (IDA) programs or similar matched savings programs that are combined with financial education to help low- and moderate-income individuals save for short- and long-term asset-building purchases. The Assets for Independence (AFI) program is a major funder of IDAs available to the broader U.S. population.
- Targeted Financial Products and Services
- Financial services and other small and credit-building loans can be tailored to cater to the needs and experiences of immigrants.
- Many immigrants like to bank in person, and the customer service experience matters to them. Thus, making customer service and locations accessible to immigrants is beneficial.
- Making mortgages available to ITIN holders allows many immigrants without other identification documents to secure mortgage loans.
- Citizenship loan availability makes citizenship available to immigrants who may otherwise not be able to afford the application cost.
The CFPB’s Response
The report specifically mentions that CFPB contact centers can assist consumers in more than 180 languages. The calls they have received in languages other than English and Spanish have “consistently increased month over month.” While your institution may not have the resources for that kind of linguistic coverage, it is still a good idea to be as prepared as possible to meet consumers’ language needs.
In addition, the CFPB developed “The Newcomer’s Guides to Managing Money,” which are intended to provide immigrants with basic and straightforward financial information. These guides are available in a variety of languages and focus on the following topics:
- Ways to receive money
- Ways to pay bills
- Checklist for opening an account
- Selecting financial products and services
Even if no hard regulations come of this report, it’s still prudent for financial institutions to be aware of the challenges immigrants face when trying to learn how to navigate our financial system and to provide assistance and resources that will serve immigrant consumers in your area. Regulation or not, improved member outreach and service is always something to strive for.
Prior to joining AffirmX in July 2012, Ms. Pannier was President and CEO of a federal credit union. Ms. Pannier also previously served as Senior Compliance Counsel for the National Association of Federal Credit Unions (NAFCU) and Director of its Regulatory Compliance Department.
In addition to her expertise in the legal and regulatory fields, Ms. Pannier has 20 years of credit union operational experience having previously served in a variety of capacities, such as Credit Manager, Director of Research and Development, and Vice President of Marketing.
Ms. Pannier holds a Bachelor of Science degree in Economics from Towson University and a Juris Doctorate from the University of Maryland School of Law. Ms. Pannier is a member of the Maryland Bar Association and the American Bar Association and has served on the faculty of the NAFCU Compliance School, the CUNA Mortgage Lending School and the Credit Union Executive Society School of Business Lending.