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Local Multicultural Service Wins Over Ethnic Groups

Mutual fund giants wanting to go after ethnic niches could take a number of lessons from community banks that have thrived for years in this area: Speak to them in their own language, in their own communities.

Community banks' success has come from offering full multicultural services, from service representatives who speak a foreign tongue, to investment products that cater to each target market's specific taste and needs, to collateral materials and advertising that appeals to their cultural sensibilities. Most importantly, in every case where community banks have garnered billions of dollars of ethnic group assets, it has primarily been because they have established a visible presence in the communities where these people work and live, according to Andrew B. Collins, an analyst with U.S. Bancorp Piper Jaffray.

Even the Investment Company Institute seemed to take a page from the success of this one-on-one, local approach with a series of investment seminars for African-Americans, held in collaboration with the National Urban League, in six major cities (see MFMN 9/11/00).

It's been small banks, like East West of San Francisco - not mutual fund giants like Fidelity or banking leaders like Bank of America - that have blazed the way into the Latino, Asian and African-American communities. East West has Chinese- and English-language Web sites, emphasizes its network of correspondent banks in Asia and continues expands its presence in local neighborhoods. East West also recently opened several branches in the 99 Ranch Market grocery chain.

As unlikely as a footprint at a 99 Ranch mart, or hosting a float at the National Puerto Rican Day Parade, may sound, establishing such a presence is working. This should tell fund companies something about the importance of approaching and respecting different ethnic groups, on their own turf, in their own tongue. Financial service companies that offer phone and Internet services in foreign languages will lead the way in capturing the fast-growing ethnic minority markets, predicts Celent, which found that 80% of Chinese prefer to speak in their own language and 60% of Hispanics prefer Spanish.

Laredo National Bank, another case in point, nearly doubled its assets in the last eight years to $2.6 billion, by moving beyond its 100 years of experience with Mexicans and Mexican-Americans in the Laredo, Texas area. Expanding north to the state's larger cities - Houston, Austin and Dallas - Laredo National's new branches are all in predominantly Hispanic neighborhoods.

This is the right way to go, according to Celent. More and more ethnic minority groups are emphasizing their ethnic identities rather than identifying themselves as just Americans, resulting in tight ethnic enclaves within U.S. cities. As tight as these enclaves may be, it is possible to reach out to them through targeted, personal campaigns.

Gary G. Jacobs, Laredo National's president and chief executive officer, said its brand has come to be an easy sell, because Hispanics see Laredo National as "one of their own."

And while Laredo has taken pains to design each of its new branches with distinctive Latin themes, the bank's commitment is not just cosmetic; every board member except Jacobs is Hispanic.

A financial services company with a broad base of customers may not want to make such a concentrated commitment to any one cultural group, but the growing importance of Asian and Hispanic Americans cannot be ignored. By 2007, Celent projects the purchasing power of both Hispanics and Asians in this country will increase 50% each, to $900 billion and $455 billion, respectively.

Lee Barney contributed to this report

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