Friday, April 18, 2008

Neustro Banco: seeking Hispanic banking customers

Nuestro Banco, a new bank set up specifically to serve the growing Hispanic population in North Carolina, has chosen Information Technology, Inc., a unit of Fiserv, to provide its core banking system.

Last year, I wrote about this emerging market for Mortgage Banking magazine. Writing the piece, I learned that this market will grow to comprise 20 percent of our nation in just a few years. I also learned that this population has little respect for traditional US financial services brands. Consequently a number of new banks are rising up in the hopes of serving this market under Spanish language brands. While Nuestro Banco (Our Bank) may not be the most creative name, it could work to attract these consumers if it keeps their needs in mind. With the Hispanic population growing rapidly in the state, it is a good opportunity.

A release issued by the two companies indicated that the bank would use ITI's Premier software suite, which offers highly scalable products for virtually every function, including core accounting, branch and Internet banking, business intelligence, risk and compliance, remote capture and transaction management, enterprise business process and content management.

“The Hispanic population is growing at 20 percent per year in North Carolina,” said David Flores, president and chief executive officer of Nuestro Banco, “and the group’s purchasing power is actually growing faster than the population growth rate. The Census Bureau estimates that by 2050, one fourth of the nation’s population will be of Hispanic origin, yet today, the Latino populace as a whole is severely underbanked.”

Flores said the key to capturing this business will be to design new ways to bank – ways that accommodate the Hispanic culture, habits and way of thinking. "We understand these factors, and so does Fiserv," he said.

Unfortunately, a key aspect of Hispanic culture is that they don't typically use banks. Nuestro Banco apparently hopes to change that by working with "a software partner who not only understood the dynamics of the Hispanic banking market as it stands today, but one who could see the long-term direction the financial industry will take in response to its expansion."

Fiserv ITI will leverage its Spanish-language Internet and telephone banking software for its new client, as well as its popular Hispanic Banking Toolkit, a tool that the company claims provides insight into cultural differences and common barriers to banking for Hispanics.

I've written a lot about Fiserv over the years and I think highly of their engineering staff. Their software is widely used, both in banking and mortgage. But the key to serving the Hispanic population probably has little to do with innovative new banking products. They view banking services pretty much the same way the rest of us do, as commodities.

They key will be in creating a community that builds trust among members of a market that have traditionally been cheated at worst and ignored at best. The tools exist to do this and I personally believe that it is likely to be a bank serving a niche that first makes good use of them. It could be Neustro Banco, in which case they'll be happy they have a good core processing system to handle all the new business.

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