NU Online News Service, Oct. 16, 12:00 p.m. – Ethnic minorities are growing in population, creating a lucrative opportunity for financial services institutions, says Datamonitor, New York, a market analysis firm.
Datamonitor’s new report, “Ethnic Marketing in Financial Services: 2001-2002,” argues that selling banking, insurance and asset management products to the U.S. Hispanic, African American and Asian American communities requires efforts on both the marketing and distribution sides.
Companies with integrated programs, including advertising, event marketing, partnerships, customer education and multicultural recruiting, have achieved an extremely high share of their target ethnic market, sometimes as high as 50%, says Brendan Ford, an analyst in Datamonitor’s financial services practice.
Ethnic minorities now account for over 30% of the US population and include over 34 million African Americans, 35 million Hispanics and 10 million Asian Americans, Datamonitor says. The latter two groups are expected to continue to exhibit strong growth as a proportion of the total population. Further, while the mean household income of the white-non-Hispanic population has been stagnant, the mean income of the ethnic markets has increased.
Sizable segments of the three major ethnic groups occupy every income segment. The Asian market is weighted toward the more affluent, and the Hispanic and African American markets are extremely large. This provides opportunities for financial services firms targeting the more affluent customer, says Datamonitor.
The company finds that the ethnic markets account for a large proportion of the total market for banking and insurance products. For example, the ethnic markets account for 18% ($167 billion) of the market for asset accumulation life insurance.
The savings behavior of the ethnic markets has increased dramatically, with 42% of minority households now actively saving compared with 25% in 1989, leading to a sizable increase in the purchase of savings and investment products, says Datamonitor.