Financial Services: Marketing to a Diverse Public
From hiring decisions to customer satisfaction, it pays to be inclusive
Founded by Irish immigrants more than 100 years ago, Bay State Savings Bank in Worcester has seen the neighborhoods it serves change many times through its history.
Today, Bay State serves a city with a nearly 50 percent Latino population and large neighborhoods of immigrants from Russia and Vietnam. President and CEO Bob Lewis says the bank has tried to meet the new challenges posed by this changing customer base by making it clear the bank is part of the community.
“The big lesson that we learned is about trying to cultivate relationships,” Lewis says. “You can’t just run ads in a certain language. You have to make a connection.”
Bay State’s strongest connection came in the form of its Champions for Children program, which helped spearhead fundraising for nonprofits in Worcester neighborhoods. The spokesperson for that program, Worcester native and WBA Middleweight Boxing Champion Jose Antonio Rivera, helped the bank connect with the Hispanic community. “He gave us the credibility to start the relationship and we’ve worked to continue it,” Lewis adds.
The financial services industry as a whole is making great strides in its effort to become more diverse in both the people it employs and those it serves. Greg Almieda, president of Global View Communications, which consults with companies on a range of diversity issues, says efforts within financial services are being driven by demographic trends and population shifts. The growing number of minorities and recent immigrants revealed in the 2000 census signaled to many businesses that they needed to pay better attention to the customers in their future.
“A lot of financial services companies are looking at recent immigrant groups and people of color as an important potential market and trying to figure out what it means for them from a new customer acquisition standpoint,” Almieda says.
For example, many minority groups don’t take full advantage of retirement savings opportunities. According to the Retirement Confidence Study conducted by the Employer Benefits Research Institute, only 32 percent of African Americans and 36 percent of Hispanic Americans who have access to employer-backed savings plans such as 401(k)s participate. This is compared to 49 percent of workers overall.
While banks have long offered “gateway services” such as savings and checking accounts to a variety of customer groups, moving into more high-end services poses a greater challenge.
For some immigrants, Almeida says, banks in their home countries didn’t inspire trust. As a result, these groups are less inclined to put their money into more sophisticated financial services, whether investing for retirement or buying insurance. One way to reach this potential pool of new customers is to increase diversity within a company.
At the Boston offices of AXA Advisors LLC, which provides investment advice to its clients, Divisional Executive Vice President Thomas Ruggiero oversees a team of financial advisors that reflects the diversity of the communities it serves.
“Boston is a substantially diverse marketplace and we feel it’s important to reflect that in our workforce,” Ruggierio says. At AXA’s New York headquarters, senior vice president John Kirksey now also holds the title of Chief Diversity Officer.
“We see representation of our customers as key, not only to match the communities we service, but to make sure we take advantage of all the talent out there,” Kirksey says. “Diversity is dynamic,” he adds. In AXA’s New York office, outreach includes financial literacy programs aimed at recent immigrants, many of whom are highly educated and have brought significant wealth with them to the U.S.
“There is a need to improve financial literacy for everyone,” says Kirksey. “That can be especially true among minority populations. Talking about life insurance or annuities or retirement savings isn’t easy for anyone. If there’s a language or cultural barrier, being comfortable with having financial discussions is even harder.”
Almieda says financial institutions need to take the long view. “There’s a certain skepticism” among immigrants, he explains. “In order to get over that, financial institutions are going to need to be involved in a meaningful way in the community.” 