Chicago Thrift Targets Ethnic Groups

Article excerpt

Building on a tradition of serving ethnic clients, a Chicago thrift is looking to Polish, German, Czech, Jewish, and Hispanic clients to help its investment product program grow.

Liberty Federal Bank executives say members of ethnic groups accounted for about 15% of the bank's $40 million in investment sales last year. And that share is likely to expand as the ethnic population and its financial clout continue to grow.

"Early on we recognized there is more to their balance sheet than their deposits," said Kenne P. Bristol, president and CEO of Alliance Bancorp, a $1.3 billion-asset holding company formed this year from a merger of Liberty Bancorp and Hinsdale Federal Bank. Both banks in the merger of equals had strong ethnic foundations, Mr. Bristol said.

Since 1982, Liberty Federal and its predecessor, Liberty Bancorp, have used Invest Financial Corp. to sell investment products through branches. When the market has done well, so has Invest's program, Mr. Bristol said.

Edward P. Munin, senior vice president of Liberty Federal and program manager for the bank's Invest program, said he expects $50 million in sales in 1997 with a growing share of ethnic sales. He oversees the 10 investment representatives who market mutual funds and annuities through the thrift's 14 branches in the northern suburbs of Chicago. All hold Series 7 licenses, enabling them to sell a full array of investments, and are dual employees of the thrift and Invest.

Despite evidence of the increasing economic power of minorities- Hispanics alone wielded $220 billion in purchasing power in 1995, according to Hispanic Business magazine-consultants say a majority of banks pay little attention to the population segment.

Liberty Federal is an exception, Mr. Bristol said.

The thrift markets to ethnic customers who are fairly well established in the United States, making it possible to reach out to prospective investors without having to recruit a multi-lingual sales force. Some have been in the United States as long as 30 years; some are the children of immigrants. Instead, Liberty emphasizes cultural understanding, said Mr. Munin. "It's not so much the language-it's that our tellers are ethnic."

Some observers have doubts about the value of singling out ethnic groups for special attention.

"Sometimes we get carried away with the segmentation," said Roger Thomas, a bank consultant based in Columbus, Mo. "Everybody want to save for college, everybody wants to retire, everyone wants to care for aged parents-these wants and needs are universal."

Ethnic groups don't differ that much financially from other prospective investors, he said, so banks shouldn't view them as different. He said some common-sense moves-for instance, putting a Spanish-speaking investment representative in a branch in a Latino neighborhood-are usually all it takes to reach them.

But Mr. Munin sees some subtle differences between immigrants and first-generation Americans and the rest of his customer base.

For instance, he said, the ethnic groups Liberty serves are heavily influenced by referrals-much more so than other customers.

He pointed to a young Korean teller who has been successful in introducing other Koreans to the investment program. The Korean customer is unlikely to go to the thrift without some personal referral, he said. …