Research Finds $113T Unseen Wealth Creation Engine Making Latinos “non-traditional wealth bankers” instead of “underbanked”

By: Ana Ceppi, SeniorMarCom advisor with 10+ years of Financial services and HealthCare experience and Founder of Factivist LLC

THE 5TH LARGEST GDP IS EARNING AND SPENDING MONEY, BUT ARE THEY SAVING AND GENERATING WEALTH? THE SHORT ANSWER IS YES!

Every year, during Hispanic Heritage Month, the Latino Donor Collaborative issues a white paper on the Latino GDP (5th largest global in 2022) a valuation that is critical for marketers and business to recalibrate their business plans and ensure they are realizing the fiscal opportunity.  This high level data is in sharp contrast with the “underbanked”Hispanic marketplace characterization. After reading the report during L’Attitude, we wonder if the Latino consumer is more than a “spender”? And the answer is yes!

According to a new report issued by Finhabits, Latino wealth has grown 12% annually for the past 10 years and the rate is 2x Non Latino Whites and has the potential of reaching $113T by 2050. Finhabits sees that 90,000 Latinos inside their fintech ecosystem are saving 6.5% of their salary regardless of income.  Latino is an Everyday Saver and at that rate, even with lower household income, are accomplishing the industry recommended norm in savings.

FROM “UNDERBANKED” TO “UNTRADITIONALLY BANKED” THE HISPANIC POPULATION MAY BE RE-DEFINING BANKING AT SCALE

The Latino population is driven to entrepreneurship and growth even when the legacy systems have not been “built for them”. In the report there is evidence that fintech and Neo banks may be the way Latinos access banking and wealth creation/acceleration. For example, the report sheds light on why Latinos might be perceived as “underbanked” when in reality they are “untraditonally banked”:

1) Lack of Trust. Hispanics are digitally centric and are leaping the traditional legacy banking systems to accumulate wealth using fintech. There is evidence provided by the Edelman Trust barometers that Latinos and POC have a negative experience with the financial services sector.

2) Atypical Worker. Latino/a/e as entrepreneurs are outside of the established traditional savings and wealth accumulation systems (employed contingent economy/matches) that allows them to access public market securities.

3) Everyday Saver. As small business owners, cashflow is critical for success resulting in the need to micro-invest vs. payroll deductions of big business… and most small businesses do not get to the $1M revenue mark to be seen by big banks.

SELF RELIANT AND SELF AND ENTREPRENEUR, HISPANICS COULD BE AN EARLY INDICATORS OF A FINANCIAL SECTOR PARADING SHIFT TO FINTECH, MICRO-INVESTING AND NEOOF NEO BANKS.

The Hispanic home ownership and small businesses ownership rates in the United States will continue to grow at a significant rate and have a positive economic impact on Latino Wealth. But banks are not seeing or can’t distinguish the Latino wealth being accumulated.

The research delineates that for Latinos, home and business ownership is not enough to generate wealth… it does the math to support that the Latino community needs more to achieve generational wealth. Latinos need diversification of assets into public securities(401K into public securities to achieve wealth, where Fintechs like Finhabits is seeing success.