Banking’s Multicultural Moment

By Kevin Eaton

With the U.S. population expected to be majority-minority by 2045, according to the Brookings Institution and U.S. Census Bureau data, that’s something that banks have an eye on as they look into the future for new areas of growth. Those projections mean that ethnic minority clients are already in banks’ markets in large numbers, and banks are adapting and creating multicultural banking programs to serve them effectively.

“We believe that the future of America lies within the multicultural segments across the country. They are driving all of the population growth in the country, they’re also driving a major share of expenditure growth in the country and at M&T we see potential,” says David Femi, manager of multicultural banking and community affairs with M&T Bank, based in Buffalo, New York. “We know there is limitless potential in these multicultural segments and we’re doubling down our efforts in building growth strategy around these different multicultural segments.”

For Luis Lobo, recently retired EVP and multicultural banking manage at Charlotte, North Carolina-based Truist Bank, adapting to this segment of the population is a reflection of what the country has become.

“The diverse communities in this country have in many places become the majority and that’s where the growth is coming,” says Lobo. “A client is economic oxygen for an institution, so where is your next line going to come from—that’s the question, and if you’re not engaging with these communities you’re not going to get the growth.”

Money talks (in any language)

At Denver-based FirstBank, multicultural banking is seen as the resources it provides for diverse communities. One of those resources is a staff that knows a variety of languages. The bank has employees that speak different languages including, Spanish, Chinese, Vietnamese, Korean and various African languages.

“We want our customers to come to the bank and feel comfortable. Speaking with someone that speaks the language and also has an understanding of their culture, I think that’s very important—especially when you’re a first-generation immigrant,” says FirstBank’s EVP for multicultural banking, Tony Oum. “Multicultural banking is basically a resource for our communities and customers because we want to help support them and achieve that American dream. It’s really important to us.”

FirstBank has different specialized banking centers throughout their systems including Asian and Spanish banking centers with tellers, loan officers and management that that speak different languages. That way, says Oum, a customer can walk into one of these banking centers and he or she can fulfill all their banking needs in their language.

“We want to make sure our employees match our communities and that way people come to the bank feeling comfortable and they see people that look like them and speak their language, they feel comfortable doing business with us,” says Oum.

FirstBank’s multicultural banking started in part with a loan officer seeing an opportunity in the early 1990s. At the suggestion of a loan officer, the bank placed an ad in a local Chinese newspaper to meet that communities needs and educate them about banking in the United States.

“That’s the biggest piece, with these diverse communities, educating them about the American banking system, about saving money, about having accounts at the bank, the importance of building credit,” says Oum. “It’s kind of cool to hear those people’s stories of getting into their first home and really exciting and really heartwarming for a lot of our team members here at FirstBank, when they attend those closings.”

Accelerating change

M&T has put its multicultural banking program on the fast track. Last year the bank decided to designate some bank branches as multicultural, making sure they reflect the racial, ethnic and language diversity of the communities where they are located. The bank had 19 branches as part of a pilot program and by the end of 2020 was expecting to have 124 branches designated as multicultural, with up to 180 the following year.

For its multicultural branches, the bank hires from the local neighborhood, trains them, certifies them as bilingual bankers if they speak another language and will be paying them a 10 percent premium for that skill, says Femi. Each multicultural branch has marketing material in different languages and images that reflect the community.

“We have to be obsessed with our multicultural communities and I think at the bank, I believe in my heart that’s what we’re doing,” says Femi.

In addition to adapting branches to the local community, M&T has started in Buffalo a Multicultural Small Business Innovation Lab. The six-week program will provide 30 multicultural businesses with guidance and education in business planning, establishing credit, accessing capital, marketing and networking. At the end of the program, the bank will have a pitch competition where participants will pitch their ideas about how they think they can scale their business based on what they learned.

“At the end of the pitch competition we will give out cash incentives, a total of $10,000 will be shared among the top three of these small businesses. I am very proud of that,” said Femi. The goal is to scale up the programs to become an annual event held at specific markets across M&T’s network.

Truist has decided to establish a multicultural banking center based on U.S. Census trade areas reporting large concentrations of African-American, Asian or Latino populations. If any of those populations (or all three) are represented at a certain level, Truist will designate that branch a multicultural banking center. That’s when the most important thing happens, Lobo says. The bank hires from the local area for language skills, community dialect and cultural knowledge. The bank has found those employees are more successful and have a lower turnover rate than others because of the connection to the community.

“This is not something you turn on, this is something you start and engage in your communities and keep building it over time and it has a huge impact on your staffing, but more importantly it’s going to have an impact on your clientele.”