The Failure of Traditional Banking - This situation is due, in part, to Hispanics general lack of financial education. Many of them were without accounts in their countries of origin, and believe that these institutions are only useful for the rich. Curiously, Latin American immigrants to Spain do, in fact, enter the financial system. Thus, questions arise over failures in the U.S. institutions.
The U.S. banking industry appears incapable of recognizing the potential of this market, considering it unprofitable to have Hispanics as customers. The industry has not yet found a way to overcome language barriers or adapt its services to new arrivals. For example, the minimum balance required to maintain an account is set too high, which effectively eliminates recent arrivals. The situation with loans is similar. To grant them, banks usually ask for a social security number, which again eliminates all those people without their papers in order.
U.S. regulations technically allow financial institutions to decide which identification documentation to request from their customers. Theoretically, that kind of freedom could allow banks to deal with illegal immigrants, but given the current climate in the United States, such freedom usually comes down on the side of greater restrictions. In other words, when in doubt, rule them out. If banks can limit the functionality of the accounts they open for immigrants, such as not allowing them to use automated teller machines (ATMs), then they normally choose to do so.
Immigrants end up feeling discriminated against, which only reinforces their distrust of traditional banking. Naturally, they start to believe that banks are in cahoots with the government, and all of the information provided could be used against them. When a major institution does try to make it easier for illegal immigrants, banks did by offering a special credit card, political pressure mounts and stunts its development. |
