Miami, Florida

As part of the company’s expansion plans, Medalla Light, the well-known Puerto Rican beer, will now be available in 12 states and the District of Columbia. Agribusiness Lettufresh, through its alliance with Walmart Puerto Rico, is now exporting its locally grown lettuce Walmart’s stateside stores. Meanwhile, Marvel International’s “El Gordito” hamburger doubled its presence from 100 establishments stateside to 200, in such states as Florida, New Jersey and Connecticut.

As reported by THE WEEKLY JOURNAL, these are just some of the Puerto Rican companies who have been exporting successfully in recent years to the U.S. market, some with a focus on the Puerto Rican diaspora and the larger Hispanic market. But a study points out that these business opportunities for locally made products are also relevant for the island’s savings and credit cooperatives, as they can also capture part of the Hispanic market that does not yet have banking services.

Other growth opportunities for Puerto Rican cooperatives are to use technology to expand their customer base, diversify digital products and penetrate millennial and Generation Z markets, without neglecting services to older adults.

These were the main recommendations of economist Leslie Adames, director of the Economic Policy and Analysis Division of Estudios Técnicos Inc., during a recent presentation to the Puerto Rico Credit Union Executives Association.

“Although the Puerto Rican diaspora has been growing, it represents only 9 percent of the 61 million Hispanics residing in the United States in 2019. By 2040, the population of Hispanics is projected to reach 87.6 million, 23 percent of the United States population. The Hispanic market represents an opportunity for cooperatives. 21 percent of the Hispanic population is underbanked and 9 percent is unbanked, according to a 2020 Federal Reserve report. A personal treatment and focus on customer service would position cooperatives as attractive financial institutions in contrast to commercial banks,” Adames said.

Only 4.2 million Hispanics are cooperative customers in the U.S.; this is a penetration of only 6.8 percent in the market, he indicated. “This population has an average income of less than $25,000 and an education level of high school or less, so financial inclusion is important since many opt for other alternatives of financial services such as pawn shops, check cashing services and PayDay Loans,” Adames added.

Growing Puerto Rican Diaspora

In the case of the Puerto Rican diaspora, they have greater purchasing power than other Hispanics, but many live in rented housing, he said. Since 2000, people of Puerto Rican origin born in the United States increased to 5.6 million. The number of Puerto Ricans born on the island who emigrated grew by 27 percent to 1.6 million. The states with the highest Puerto Rican populations are Florida, Texas, Pennsylvania, New York and Massachusetts, where there would be more opportunity for Puerto Rican cooperatives to offer them banking services.

In considering what services cooperatives could provide, Adames noted that consumer and auto loans have been the fastest growing products within the Hispanic population in the U.S. In 2017 and 2018, the percentage growth in the use of Hispanic financial services was 22 percent in personal loans, 18 percent in auto loans, 9 percent in mortgages, 8 percent in credit cards and 4 percent in checking accounts.

“An expansion in the use of digital financial services is expected, especially after the pandemic. The digital evolution in the financial sector along with changes in demographics mark differences in usage and perceptions between generations. One in three Gen Zers and one in five millennials obtained a loan online, which represents an increase of 1.5 times since 2018. Cooperatives and other financial entities are active in managing internal changes to adapt to the new competitive reality,” Adames said.

He recommended that cooperatives in Puerto Rico: strengthen the capital base to achieve financial flexibility; invest in alliances focused on closing the digital divide; and use technology to expand their customer base and diversify products and services with instant payments, personal finance solutions and various payment methods. Likewise, they must penetrate markets across generations: conquer millennial and Gen Z markets, while developing accessible services for older people.

Managing Editor for The Weekly Journal. She is a journalist with more than 20 years of experience. Rosario received both of her bachelor’s and master’s degrees in International Politics from Georgetown University’s School of Foreign Service.

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