Financial Access for Immigrants: Lessons from Diverse Perspectives
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Financial Access for Immigrants: Lessons from Diverse Perspectives Federal Reserve Bank of Chicago • The Brookings Institution Acknowledgments Financial Access for Immigrants: Les- grateful to the Chicago Fed’s Steven sons from Diverse Perspectives is a Kuehl and Michael Berry for lending joint project of the Federal Reserve their expertise to many aspects of the Bank of Chicago’s Center for the project. We also express our gratitude Study of Financial Access for Immi- to MaryJo Cannistra, Shirley Chiu, grants and The Brookings Institution Helen Koshy, and Barbara Shoulders Metropolitan Policy Program. This from the Chicago Fed and to Alan publication brings together lessons Berube, Matthew Fellowes, Saundra learned during a three-year period Honeysett, and Rebecca Sohmer from of intensive activities related to Brookings for their many important immigrant financial access. These contributions to this project. activities included a national confer- ence, several independent research We would also like to thank the projects, and a series of regional con- participants and panelists at the ferences and meetings sponsored by national and regional immigrant the Chicago Fed. We have benefited financial access conferences. Their from the wisdom and experience of insights have helped to shape the a broad range of people and institu- ideas and broaden the perspectives tions and would like to acknowledge presented in the publication. We are their contributions to the project and also indebted to the many individuals to this publication. we interviewed and met with in the course of working on the publication. We would first like to thank the Several reviewers provided detailed Pew Hispanic Center and the and thoughtful comments on draft Ewing Marion Kauffman Foundation versions of this publication; our for their generous support of the deep gratitude goes to Michael national conference that formed the Barr, Michael Berry, Alan Berube, basis of this work. In particular, we Jeremiah Boyle, Matthew Fellowes, acknowledge Pew Hispanic Center Desiree Hatcher, Steven Kuehl, Una director, Roberto Suro, for his advice Okonkwo Osili, Harry Pestine, and and inspiration. We are also grateful Alicia Williams. Any remaining errors to the Joyce Foundation and the are of course our own. Russell Sage Foundation for their support of the project. We are grateful to Anne-Marie Concepción of Seneca Design for A host of individuals at our institutions design and layout. We are also very and from other organizations provided thankful for all of the contributions that invaluable help with this project. We Jennifer Cornman of the Chicago Fed would especially like to acknowledge made to the design and production of our colleagues in Consumer and the document. Many thanks as well Community Affairs at the Chicago to Dorothy Kronick of the Chicago Fed, headed by Alicia Williams and Fed for the superb photographs and those in the Brookings Metropolitan design advice. Policy Program, led by Bruce Katz. The Chicago Fed State Community Affairs Program Directors – Jeremiah Note: This document represents the views of the authors and does not necessarily repre- Boyle (WI), Harry Ford (MI), Desiree sent those of the Federal Reserve Bank of Hatcher (IN), Helen Mirza (IA), Harry Chicago, The Brookings Institution, or the Pestine (IL) – helped to ensure that Federal Reserve System. References to their on-the-ground experience is specific financial institutions should not be reflected in the publication. We are very interpreted as endorsing them. Financial Access for Immigrants: Lessons from Diverse Perspectives Anna Paulson Audrey Singer Robin Newberger Jeremy Smith May 2006 THE BROOKINGS INSTITUTION METROPOLITAN POLICY PROGRAM © 2006 Federal Reserve Bank of Chicago and The Brookings Institution H CONTENTS 1 SETTING THE SCENE PAGE 1 4 THE COMMUNITY PAGE 53 Why is Immigrant Financial Access so Important? Leveraging Organizations that Have a Stake in Immigration is transforming the United States. Immigration affects virtually Immigrant Success every community. Healthy communities offer broad financial access to all Many different organizations, in addition to banks and credit unions, have residents, but immigrants and immigrant communities lack broad financial a stake in connecting immigrants with the financial mainstream. These access. include organizations whose mandate is to provide services specifically to immigrants, as well as more broadly focused institutions like schools, employers, and law enforcement agencies. A series of case studies 2 THE CUSTOMER PAGE 11 highlight the assortment of motives and methods employed by community Financial Practices of Immigrants organizations to connect immigrants to the financial mainstream. While there is much diversity within the immigrant population, many immigrants rely heavily on the alternative financial services sector to send remittances, cash checks, and pay bills. This is particularly true of immigrants 5 THE FUTURE PAGE 77 with low incomes and low levels of education. Poor English skills, weak Opportunities and Challenges institutions in the country of origin, and the tendency to cluster in immigrant Greater financial access can be achieved if banks provide more of the enclaves also contribute to an orientation away from banks and toward the products that immigrants want, like check-cashing and bill payment. Efforts alternative financial services sector. to expand bank branches at schools with large immigrant populations can help to reach the children of immigrants and their parents. Work opportunities bring many immigrants to the United States. By working with 3 THE INDUSTRY PAGE 29 employers, banks could strengthen their outreach to immigrants who are Financial Sector Efforts to Reach Immigrant Customers ready for banking services. Neighborhoods with large immigrant populations Mainstream financial institutions of all sizes are reaching out to immigrant are areas of great need and great opportunity. Negotiating the complicated customers. Banks are developing and marketing remittance products, economic, social, and regulatory challenges that these opportunities raise accepting alternative forms of identification, and working hard to earn the requires meaningful dialogue and coordination among bankers, regulators, trust of the immigrant community. Despite these efforts, success remains immigrant advocates, and community representatives. elusive, particularly in the remittance area. The regulatory environment is largely supportive of bank efforts to attract immigrant customers. ENDNOTES | 86 REFERENCES | 90 FINANCIAL ACCESS FOR IMMIGRANTS: H 1 SETTING THE SCENE PAGE 1 4 THE COMMUNITY PAGE 53 Why is Immigrant Financial Access so Important? Leveraging Organizations that Have a Stake in Immigration is transforming the United States. Immigration affects virtually Immigrant Success every community. Healthy communities offer broad financial access to all Many different organizations, in addition to banks and credit unions, have residents, but immigrants and immigrant communities lack broad financial a stake in connecting immigrants with the financial mainstream. These access. include organizations whose mandate is to provide services specifically to immigrants, as well as more broadly focused institutions like schools, employers, and law enforcement agencies. A series of case studies 2 THE CUSTOMER PAGE 11 highlight the assortment of motives and methods employed by community Financial Practices of Immigrants organizations to connect immigrants to the financial mainstream. While there is much diversity within the immigrant population, many immigrants rely heavily on the alternative financial services sector to send remittances, cash checks, and pay bills. This is particularly true of immigrants 5 THE FUTURE PAGE 77 with low incomes and low levels of education. Poor English skills, weak Opportunities and Challenges institutions in the country of origin, and the tendency to cluster in immigrant Greater financial access can be achieved if banks provide more of the enclaves also contribute to an orientation away from banks and toward the products that immigrants want, like check-cashing and bill payment. Efforts alternative financial services sector. to expand bank branches at schools with large immigrant populations can help to reach the children of immigrants and their parents. Work opportunities bring many immigrants to the United States. By working with 3 THE INDUSTRY PAGE 29 employers, banks could strengthen their outreach to immigrants who are Financial Sector Efforts to Reach Immigrant Customers ready for banking services. Neighborhoods with large immigrant populations Mainstream financial institutions of all sizes are reaching out to immigrant are areas of great need and great opportunity. Negotiating the complicated customers. Banks are developing and marketing remittance products, economic, social, and regulatory challenges that these opportunities raise accepting alternative forms of identification, and working hard to earn the requires meaningful dialogue and coordination among bankers, regulators, trust of the immigrant community. Despite these efforts, success remains immigrant advocates, and community representatives. elusive, particularly in the remittance area. The regulatory environment is largely supportive of bank efforts to attract immigrant customers. ENDNOTES | 86 REFERENCES | 90 LESSONS FROM DIVERSE PERSPECTIVES 1 SETTING THE SCENE Why is Immigrant Financial Access so Important? CHAPTER ONE | SETTING THE SCENE