How lenders can support multicultural growth and incorporate diversity in the workplace

Edgar Hernandez is a Senior Manager in the Multicultural Center of Expertise (MCOE). We chat with him about how simplicity and transparency can help create trust with consumers, especially in underserved markets. He discusses how lenders can support multicultural growth within their organization, being mindful of peer and management diversity in the workplace, as well as how to use job postings to attract diverse talent to your organization.

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Transcript

Stephanie:
Welcome to Mortgage Connects by MGIC bringing you the latest insights from top mortgage professionals from the industry. I'm your host, Stephanie Budnik. And today joining me, my colleague and cohost Concepcion. Guerrero. Concepcion is a Marketing Program Specialist at MGIC who leads our diversity marketing efforts. Today, we'll be teaming up to hear insights from Edgar Hernandez.

Concepcion:
Thank you so much, Stephanie, and I'm very excited to have today, joining us, Edgar Hernandez is a Senior Manager in the Multicultural Center of Expertise, or the MCOE, with the CUNA Mutual group. The MCOE analyzes data to better understand underserved consumers, develop, strategies and new products to retain and attract CU members and build coalitions with other entities that support similar efforts. Prior to this role, Edgar worked for Delve, a top tier innovation firm that uses design thinking and engineering to help companies launch new products. You also spent a decade working at American Family Insurance in the Market Research Customer Experience and Innovation team. He received his Bachelor in Finance from Iowa state, his MBA from UW Madison, and a certificate in Strategic Decision and Risk Management from Stanford. In his spare time, Edgar enjoys dancing the Argentine Tango and volunteering as a bilingual financial coach and spending time with this family and church. So welcome Edgar.

Edgar:
Thank you, Concepcion. Thank you both for saying my name Edgar almost like the way I would use to hear it back in Mexico. So I appreciate it.

Concepcion:
Isn't that refreshing? Trust me. I know what you mean, Concepcion, when it comes to my name. Well I just read your bio and it's quite impressive, but I'm going to ask that, can you explain what does it mean to be Multicultural Strategy Manager at CUNA?

Edgar:
Yeah, so it's a relatively new role. And again, when I look back, I guess four years have already gone by quickly, it just felt like yesterday that I joined the organization. So really what it is, CUNA Mutual, kind of decided to be intentional about creating a group within, they're getting decisions, that were just purely dedicated to looking at this multicultural space. And when we talk about multicultural week, we tend to think that it's primarily race and ethnicity. But that's not the only layers that we look at. That's one of the main layers, but if you think of this as a multifaceted polygon and if I had here, a video would show you what we typically show is, think about this, one of those 12-sided dice and you have race and ethnicity, you would have age or generations you would have whether you're creating a new member or not. Financial literacy levels income sexual preferences in terms of LGBTQ. So there's so many different elements to that, not just race and ethnicity. So that's the first thing I'll say. So in my role, what we do is one of three things we look at a lot of data. A lot of numbers to try to really come at it from a kind of a scientific and numeric approach to sized opportunity, understand where our gaps. And we do that in a couple of ways we have primary data and secondary data. So we either interview consumers directly, or we rely on secondary sources and we kind of put the pieces of the puzzle together. So that's the first pillar. We have three pillars. So the first pillar is take a look at data and extract insights from that. The second pillar would be to then put those insights into action, right? I mean, it's just not just that we want to let it sit there and be a pretty piece of art like, oh, "what a nice chart." No, we want to say, "what about that? What can we do about that?" So I spent a lot of time working within the organization within departments and saying, "how does this fit with your business plan? What do you need to do differently? What are the areas of improvement? What do we need to get rid of? And then so that's the activation we call that activation. And the third piece is I would say just is the partnerships that you mentioned in my intro is who do we partner with because we can't do it alone, right? And that's part of the reason that we have in this conversation with MGIC is to be able to spread the word and kind of align and use our respective superpowers to share the insights and the wins, the successes that we've had. So this, the third pillar being this sort of a, it's the promotional aspect of it. The partnerships is just really becoming more than one entity that's doing this. So does that make sense? Those are the three main roles that are doing, I spend a little bit of time in each of those three areas.

Stephanie:
Gotcha. That makes a lot of sense to me. That's very complex, but it's good that you're doing something with the data and really taking that opportunity within your team. It sounds very interesting and complex.

Edgar:
Yeah.

Concepcion:
Clearly here, part of your role, it focuses on the underserved consumers. So can you talk about some obstacles that those underserved consumers have to face and the ways that lenders can better serve them based on the data that you, that you collected?

Edgar:
Yeah. Good question, Concepcion. I'll speak first about the industry that we're in. So with CUNA mutual, we primarily are sort of a, B2B model. Historically, we've been selling payment protection insurance, right? To credit unions and credit unions in turn would offer those products to their credit union members. And so over the years for the past 85 years CUNA Mutual has know, come around and we have over 90% of the market. We have a lot of credit union partners and we sell life insurance, home and auto through a couple of other entities. And so one of the things that I learned right away when I joined the organization is that we have done a really nice job of keeping products simple, very easy. In other words, when you apply for life insurance, we don't ask a lot of questions, right? We don't necessarily even have to in some of our products, even do a physical exam. Right? Which it makes a lot of people uneasy, like, "oh my god, they're gonna find out this," or "I don't want anybody in my home." And so of course there's a risk and reward or a trade-off with less information. We obviously have to charge a little bit more. But what that does is it opens up the possibility for individuals who say, "look, I just need this. I don't want to have to answer a lot of questions. I just need coverage." And so we offer products that don't really ask a lot of questions. We do background checks and like hit the health sort of database to find out if there's any prescriptions that the member may have. And so we try to get a little bit of a picture, but we don't exclude. Our products are all inclusive and people have, of course, the choice to give more information, and of course, their rates might be better. And so I think the lesson learned from that in the lending aspect is credit unions or the financial institutions that try to lower their risks by asking typical questions, right? Credit score, and how many years have you worked? And they want to see a consistent income. They don't want to see a lot of debt and those are fine. And that served a purpose decades ago or even centuries, but times have changed and what we're seeing now, and I think you'd probably agree, is that we have a lot of individuals that they probably have seasonal work and they're they're really, really do well in the summer because maybe they're in the landscaping business or in the construction business. Or maybe in the winter, they're doing snow removal like we do here in Wisconsin. So they may not be a constant flow, but they're doing very well. Now, if I'm a lender and an underwriter I'm going to see, well, there's a lot of fluctuation that doesn't feel comfortable, but we're finding out, especially with some communities of color, especially maybe even the Hispanic community and that we're talking about Hispanic heritage month, is that oftentimes financial institutions is the first time that they may be exposed to such a member and, or a customer. And they don't know how to underwrite that. And they don't know if what about do you have the right ID or the right documentation and oftentimes there's missed opportunities because some of those folks may not have social security numbers, but they do have individual tax ID numbers. ITIN loans as they call it. And so what we're seeing in this space and I work with inclusive, which is changes, name, it used to be called the Federation of community development, credit unions, or just the Federation, but now they're called inclusive without the E at the end, they've done quite a bit of work to understand data, to find out, look at those credit unions that have given loans that are ITIN loans. And what has happened is they've been surprised that there's low loss ratios, lower loss ratios, right? That was, that's been surprising because typically if, you don't have social security number, well handle that's kind of risky, right? And that has not been the case. And so there's quite a bit of opportunity. So what lenders can do is simplify the process, not make it intimidating and also create that trust so that consumers can say, "wow, I had a great experience with this credit union". And I didn't feel like I was being interrogated. I felt like I was being ushered along. They were very helpful. And what I'm going to tell others about this because they treated me with respect. They treated me with dignity." So I think those are a couple of things that lending institutions can do.

Concepcion:
Yeah. And that's huge. I mean, word of mouth is a big one. At least I know personally from the Latino community is huge. And you mentioned the fact, you know, simplicity keeping things simple. But I think hand in hand also goes with the lack of knowledge, both consumer and both with the lender. So I think your role with the data and everything that you do, I think that's important educating the financial institutions in situations like the difference then, the ITIN number that might come across and also the financial institution educating also the community, which is huge. I know credit unions are more member-centric. And I think they have kind of a unique situation because with their focus of being still member-centric and wanting to help the members, they have kind of a step ahead from all the other lenders I would say. So I think it goes hand in hand, the lack of knowledge, and also the opportunity that you're taking here to educate the lenders and educate the community. I think it's huge.

Edgar:
Right. One thing else that I lacked I've shown is that also the element of you want to be transparent no surprises. One of the things that we're up against as an industry and also banks to be honest is that there's a lot of payday lenders out there. When we show some of our statistics and graphs, I show a map, let's say of Milwaukee. And I say this map has a kind of a heat map that shows the darker the county, the more diversity there is. But what we do is we overlay that with dots, that show where there are credit unions, right? And you may see like in a region of, how many miles, square miles, maybe like two or three credit unions, but then we overlay that with payday lenders and instead of like three dots, you see like 15 dots. And so what happens is why are there so many, and it, it becomes a question of accessibility is this one almost an every corner. Payday lenders, check cashers and all that stuff, which of course charge huge, unreasonable amount of interest rates, but here's the thing. Consumers go to them for a reason cause they make it easy. They don't pass judgment and they're very transparent in terms of the fees. So there's a lesson to be learned there for other lending institutions is to be transparent, not surprises like here are some other fees that are going to happen. I think the mortgage industry has tried to have a job, but making it a front, it's like what are going to be the closing costs all in all, what is going to be that? Okay. And, and we know there's forms of course, that, that we give people that do this, but just from the very beginning, just let people know, not only are you going to pay this cost up front, but you may want to have a little bit of reserve because there's things that may come up as you're in your first year of the house that something broke, do you have a, maybe a thousand dollars in reserves? Because if you don't, you may end up having to take out another loan, which of course is good for financial institutions, but it's not necessarily good for the member or the customer. So we have to keep those things in mind.

Concepcion:
Yeah. No, being transparent is very important and ultimately being offering that transparency will ultimately build that trust and that relationship with your members. So I think it's very important. So thank you for, for touching on that. Let me, let me ask you another question here. So CUNA has done a lot of work to support diversity and not only in the workplace, but also in the community with customers. Can you tell me more about that please?

Edgar:
Yeah, so that's one of the things that really attracted me to CUNA Mutual is just their, their commitment to really live by the credit union philosophy, which is people helping people. I mean, I was not looking for a job. I was pretty happy doing this, being part of that consulting firm in design and innovation, that's my jam. But I really liked, I was inspired by CUNA Mutual's vision and my manager, my director, he's our senior VP now. He was also somebody that I really admired. So those two things combined and an offer that I couldn't refuse made me join the company. So we do have over 15 employee resource groups, we have a lot of representation, different communities, different groups. And the one thing that I like that we also do is corporate social responsibility. Every year we have like $2 to $3 million that we allocate to different causes in the community where there's food banks in underrepresented areas, we're trying to help other community-based organizations to provide education, financial literacy, just wellbeing. And, and I really liked that. And the last thing is that we've also, just recently in the past 12 months, I kind of was a little bit of a catalyst, a little bit of an instigator, whatever you want to call it, but just ask our investments department to look at what's called more investing in ESG, environmental social, and then governance investments. So the S is probably the one that we are more interested in, which is a social I guess social equity piece of it. And so we've allocated quite a bit of money in the millions and millions of dollars to be able to invest our member's premiums, our customer's premiums, into areas that number one, there are going to be give us the return that market rate returns, because that's what we need to have in order to pay the claims. If we ever have a claim for like a life insurance claim of we're not, but number two, that are in areas that really live up to our vision and mission, which is really well making a brighter financial future accessible to everyone. And so it's not just about products, Concepcion and Stephanie, it's not only about selling process is really about improving the wellbeing of our community. And that's what impassions me, that's why I joined this group. I really want to make a dent in society and not just sell a better product, defense your product. It's not about that. So so those are the three things and, and there's one more piece of it. And that is that we recently created a fund. We have a ventures team that looks at startups new enterprises, but within that we created what's called a discovery fund. And so we are allocating a portion of our big portfolio, a multimillion dollar portfolio to invest in startups that have some sort of connection to the financial world, but also have leaders that are women or people of color or underrepresented groups and either in their, in their management team or that they're serving those specific groups. Does that make sense?

Concepcion:
Yes, it does. And it's wonderful. It's it sounds like CUNA has invested a lot of time, a lot of resources. They have the right people focusing on the diversity statement, which is amazing. It's wonderful to hear. But in my conversations with other lenders, they're not quite there yet. They're not quite where CUNA is during the actually very, very early stages of incorporating diversity into their work, into their workforce. So what advice would you give lenders like that, that they're in the very early stages of incorporating diversity?

Edgar:
First thing I say is it is a journey, right? It is just not like you're going to be done starting January, you'd be done with December and that's it. We've been at it and every year we learn more, we get smarter. But I would say that as they're looking to bring in diversity one thing is look at the job descriptions, right. Traditionally, we tend to look at four year college or maybe even technical college, some type of GPA. And of course that's all good, but I think we've got to start looking and evaluating job descriptions from a number of different angles, maybe non-traditional students or different colleges that we normally don't go to. Maybe we're making assumptions here that a person with a four-year college degree will perform better than somebody that's a technical college. We've got to challenge those assumptions. And, and just be a little bit more discerning when we are looking at candidates and also where are we recruiting from? Right. If we go into the traditional colleges and universities, and we're not looking at, for example, HBC use historically black colleges and universities, or HSIs, Hispanic Serving Institutions, for example, then we're probably fishing in the wrong pond. If you wanna increase your diversity, you gotta go to colleges, schools that have a lot of diversity, and I'll give you an example. Recently I led and I'm leading a project within our financial advisor area we're wealth management area, and we created a job description. It was very intentional and we called it the multicultural financial services internship role. Okay. Just by virtue of leaving that, putting that multicultural in the heading, actually it attracted people that felt that they resonated with that, right? Instead of leaving it in the it into description and calling the job financial services intern we put it multicultural right at the beginning. Right? And that I think is kind of one of those intentional aspects that you don't want to leave it to chance. And also recognizing maybe you want somebody that speaks another language, depending on the area of the country that you're in, if you're in a Spanish-speaking area, add Spanish. If you are in a place where maybe French is spoken or maybe another language that is from Hmong, whatever it is, and then also acknowledge that you may need to pay a language differential. I don't want institutions to just bring somebody on board and say, well, yeah, they have those skills, but then not recognize them for those fields. Because if you think about it, if I have to hire a company to do interpreting services or translation services, I'm going to pay a fee for that. Right? I'm going to pay a fee for that. So why are we not compensating? Perhaps some of our staff people to be able to, if they have those skills and they're using them on a day-to-day basis or on a weekly basis, why not do that? So I would say, take a look at that look at the job descriptions, look at where you're recruiting. And then the last thing I'll say is that, what is your management look like? At the middle level, at the entry, middle and upper management, when somebody comes into organization, somebody that's a person of color or somebody from an underrepresented group, they're going to look not only behind to see who's next and that in the interview line, but they're going to see who is next to them and who is above them. And if they don't see people that look like them, chances are, they're probably not going to stay around long because they may not feel that sense of connection, a sense of like, "wow, I can move up the ranks. I can, I can take that job and I can mentor somebody else." So those are the things that we look for. And I think lenders can really make a dent in how they staff their offices.

Concepcion:
Yeah. I think that's huge. That's great feedback that it's, first of all I always like to mention to lenders take a look at the community that you're serving that you're located in, and then once you've evaluated that community that you're serving or would like to expand your services into, take a look at your workforce does your workforce reflect the community that you're trying to reach out to, so I'm happy that you're echoing that and touching base on that. I think it's very important. Stephanie, do you have any additional questions for Edgar before I before I ask him about his heritage?

Stephanie:
No, I really appreciate kind of, even though you're speaking to the credit union or your role within CUNA mutual, how much it can relate to other lenders from process and simplicity, treating others with respect and growing that trust with individuals, which is a good practice for anybody. But how you spoke to the workforce and those trying to reach a more diverse background and challenging some assumptions that are in there. I really liked the idea of changing that title. So I think you have some great pieces of advice to take into consideration for lenders looking to do something that's outside of their box.

Edgar:
Yeah. One thing I did want to mention is that I want to say to lenders, like, don't ask for information that one, you're not going to use or two, that that people may not have. And I've heard this from tons of friends that said, I was ready to be given a loan and that credit union and I gave him all this information where I didn't have it, or I did. And all of a sudden they said I had a loan, but then with the circumstances with COVID-19 and all that stuff they didn't, they didn't give me the loan. Maybe because my job was not stable. And so I think it's a missed opportunity. And I think that's driven out of fear that a lack of knowledge, I think if you know that some individuals don't have the documentation, you have to think about other ways, alternative credit mechanisms or signals that are in the marketplace and credit unions or other financial institutions that understand that ,they're capitalizing on that. And guess what they're bringing in more and more people. When I get one of our sales folks that talks with credit unions, I said, "Edgar, this credit union is not growing. Can you take a look at why?" We have data. And I looked at their membership by race by generation, and they said, know why they're not growing because they're not capturing a lot of the people that are in their geographical area. They have, let's say 20% of their members are are maybe gen Z or millennials, but in their demographic area, it should be like 40%. So they're under indexed by half. And so anyway, data helps. And it's important not to ask things that we know they don't have and try to find creative ways to account for those missing pieces. So anyway, and it is good to learn from other industries because that's where innovation happens. Right? You look at what one industry is doing and, and borrow it in and apply it to your own, to your own industry. So, anyway, I think because of share, you wanted to ask me about my heritage.

Concepcion:
Yeah. We were celebrating Hispanic Heritage Month here at MGIC. So can you tell us a little bit more about yourself? I see that you like Argentine Tango, so tell us more.

Speaker 3:
I do. I'm originally from Mexico. I was born there, but my family migrated to the States many years ago. And my dad said, we're all going to be here a year and here we are over 20, oh gosh, almost 30 years later. So USA is my home and I love this country. I think there are a lot of opportunities here. But yeah my roots are from, from Mexico. And then my DNA tests go back to native American and also European. So as many Latino people are as a blend, but my passion for the Argentine Tango just stems from, I like to dance. I like the Salsa, Merengue, Bachata - I like, all those dances I think it's healthy, I think it's social, I think it's fun, but also Tango, particularly it is hard. It is very hard because you've got to be, when I first started dancing Tango, I was sweating, but not because I was like having fun. I was nervous. And so it's, it was kind of funny because it was one of the most complex dances. You really have to dance and listen to your partner. And I was like to give metaphors or analogies. And I think as listening to your partner and understand how they like to move, how late they like to dance and you try to modifying and being flexible, I think can be applied. Here's the innovation piece, right? It can be applied to the world of financial services, or any business for that matter. What does your customer want? What are they saying? How are they moving? Are you meeting them where they're at? And I'm telling you, I can go on and on that could be another podcast about my lessons about Tango and life. But I've really enjoyed it.

Stephanie:
I like it!

Concepcion:
We might have to take you up on that one Edgar.

Edgar:
But I like it. And I've enjoyed it quite a bit. In fact my wife and I are going to go dancing tonight and it's going to be refreshing. So anyway, that's that's, that's my story. And I have three kids that are we try to speak English to them, er Spanish to them at home, but of course they answer in English and it's a constant battle to be able to give them a, an inheritance of language, which I think is super important. Right? It's having, I always tell my kids the more languages you learn, the more friends you will have. So with that, that's my story.

Stephanie:
Thank you. We just appreciate your time and the knowledge that you've shared with us today.

Concepcion:
That definitely Edgar, I appreciate it. Muchisimas gracias.

Stephanie:
Thank you so much for listening for all the latest industry insights subscribe to Mortgage Connects with MGIC on Apple, Stitcher, or Spotify, or check out mortgageconnects.com. Until next time.