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Black Consumers and Financial Services - US - July 2013

Published By :

Mintel

Published Date : Jul 2013

Category :

Banking

No. of Pages : 124 Pages


Given the relatively high rate of unemployment and the impact of the housing crisis, many Black consumers have less-than-perfect credit scores and significantly lower net worth than their White counterparts. According to an article in CNNMoney, White Americans have 22 times more wealth than Black consumers – a gap that nearly doubled during the Great Recession. The median net worth for Whites was $110,729 in 2010, versus $4,995 for Blacks, which has major implications for Black consumers’ ability to build wealth.
TABLE OF CONTENT

Scope and Themes
What you need to know
Definition
Data sources
Consumer survey data
Advertising
Abbreviations and terms
Abbreviations
Terms

Executive Summary
Figure 1: Current share and change in purchasing power, by race/Ethnicity, 1990-2017
Figure 2: Attitudes about financial services industry and own financial situation in last five years, by age, May 2013
Figure 3: Median net worth of households, 2005-09
Figure 4: Types of financial products/services used in last 12 months, by household income, May 2013
Figure 5: Attitudes of Black banked/unbanked consumers, October 2011-November 2012
Figure 6: Reasons for not using checks/debit cards in past 12 months, by age, May 2013
What we think

Issues in the Market
What impact has the economy had on the way Black consumers do business with the financial sector?
More Black consumers than Whites say they’re better off financially
Figure 7: Attitudes about improvement/decline in household financial health in last 12 months, by race/Hispanic origin, October 2011-November 2012
Blacks remain optimistic despite hardships and perceptions of discriminatory practices
Figure 8: Attitudes about financial industry and changes in financial health in past five years, by age, May 2013
Compared to 2010, how have Black consumers’ saving and investment habits changed?
Spending is up considerably – most are saving less or not at all
Figure 9: Changes in spending and saving habits, 2010 and 2012
Figure 10: Agreement that household can only afford basic necessities, by household income, 2010 and 2012
Blacks spend money even though many can only afford basic necessities
Figure 11: Attitudes toward monthly expenses, by age, October 2012
Figure 12: Monthly saving habits of Black households that save money, 2010 and 2012
What are some of the challenges Black consumers face in lowering their debt and increasing their net worth?
Net worth of Whites is 20 times that of Blacks
Figure 13: Median net worth of households, 2005-09
Figure 14: Asset ownership by type of asset, 2005-09
Black consumers are risk averse
Figure 15: Attitudes, opinions, and interests, by race/Hispanic origin, October 2011-November 2012
Black consumers less likely than White consumers to fear debt
Figure 16: Personal finance, by race/Hispanic origin, October 2011-November 2012
Black consumers want help managing money and planning for retirement
Figure 17: attitudes toward financial services, by race/Hispanic origin, October 2011-November 2012

Trend Application
Trend: Access All Areas
Trend: Help Me Help Myself
Mintel Futures: Brand Intervention

Black Household Income and Buying Power
Key points
Blacks most likely to live in one-person households
Figure 18: Household size, by race/Hispanic origin of householder, 2011
College-educated Black consumers most likely to see income increase
Figure 19: Changes in household income within the last year, by education, October 2012
Single households driving lower median income compared to other groups
Figure 20: Median household income, by race and Hispanic origin of householder, 2011
Figure 21: Median household income, by race and Hispanic origin of householder, 2008 and 2011
Black purchasing power expected to rise significantly by 2017
Figure 22: Purchasing power, by race/Hispanic origin, 1990-2017
Figure 23: Purchasing power, by race/Hispanic origin, 1990-2017
Buying power concentrated in South and Northeast
Figure 24: Top 10 states/regions with the largest share of Black buying power, 2012
Affluent Blacks most prevalent in Northeast

Attitudes Toward Money, Primary Financial Concerns, and Risk
Key points
Higher-income Blacks more optimistic and believe discrimination exists
Figure 25: Attitudes about financial service providers and own household situation in past five years, by income, May 2013
One third of unemployed attribute optimism to President Obama
Figure 26: Attitudes toward financial services and own financial situation, by employment status, May 2013
Higher-income Blacks are more confident in spending and more fiscally fit
Figure 27: Economic outlook segmentation, by gender and household income, October 2011-November 2012
Blacks feel their economic outlook is bleaker than America as a whole
Figure 28: Economic situation – Personal vs. U.S. outlook overall, by race/Hispanic origin, October 2011-November 2012
Higher-income Black consumers are spending and saving more
Figure 29: Increase/decrease in spending in last year due to the economy, by household income, October 2012

Banking and Investment Services
Key points
The majority of Blacks have bank accounts, especially older consumers
Figure 30: Financial products/services used, by age, May 2013
Blacks more likely to bank with credit unions, Bank of America, or Chase
Figure 31: Usage of bank brands, by race/Hispanic origin, October 2011-November 2012
More Blacks use PayPal than Western Union to send or receive money
Figure 32: Types of financial products/services used, by age, May 2013
High-income Blacks are more likely to have credit cards and bank accounts
Figure 33: Types of Financial products/services used in last 12 months, by household income, May 2013
Figure 34: Non-bank financial products/services used in last 12 months, by household income, May 2013
Unemployed are unbanked – but retirees maintain relationship with banks
Figure 35: Financial products/services used in last 12 months, by employment status, May 2013
Infrequency of writing checks drives why unbanked don’t have an account
Figure 36: Reasons for not using checks/debit card, by age, May 2013
One fourth have used payday loans five or more times in last 12 months
Figure 37: Payday loan/advance services brands used in last 12 months and frequency, Blacks overall, May 2013
Figure 38: Frequency of use – payday loan/advance services in last 12 months, Blacks overall, May 2013
Poor credit and expediency of getting payday loans attract customers
Figure 39: Reasons for using payday loan/advance services, Blacks overall, May 2013
Blacks are less likely to go online for banking, insurance, and investments
Figure 40: Online activities incidence and frequency for banking, financial information/stock trading, and medical services and information, by race/Hispanic origin, October 2011-November 2012
Blacks who do use online banking do it more frequently than others
Figure 41: frequency of online banking, financial information/stock trading, and medical services and information, by race/Hispanic origin, October 2011-November 2012
Blacks conduct more transactions from computer than in person or mobile
Figure 42: Banking activities conducted by type of transaction, Blacks overall, July 2013
Black online customers conduct more banking transactions
Figure 43: Banking services used by type of transaction, Blacks overall, May 2013
Blacks more likely to carry prepaid cards – Visa more likely in their wallet
Figure 44: Prepaid card usage, by race/Hispanic origin, October 2011-November 2012
Figure 45: Prepaid card usage, by race/Hispanic origin, October 2011-November 2012
Blacks more likely than anyone else to send or receive money within U.S.
Figure 46: Usage of remittance services, by race/Hispanic origin, October 2011-November 2012
Figure 47: Top five companies used for sending/receiving money, by race/Hispanic origin, October 2011-November 2012
More Blacks have credit cards issued by Chase, Bank of America, Capitol One
Figure 48: Incidence of credit card ownership, by race/Hispanic origin, October 2011-November 2012
Figure 49: Incidence of credit card issuers used, by race/Hispanic origin, October 2011-November 2012
Figure 50: Type of credit cards and brands owned, by race/Hispanic origin, October 2011-November 2012
Figure 51: Mean credit card usage frequency in last 30 days by brand, by race/Hispanic origin, October 2011-November 2012
Black credit card holders prefer cash back and earning points
Figure 52: Types of rewards programs associated with credit cards by brand, by race/Hispanic origin, October 2011-November 2012
Black consumers are more likely to maintain a credit card balance
Figure 53: Proportion of balance usually paid monthly on credit cards, by race/Hispanic origin, October 2011-November 2012
Black consumers less likely than Whites and Asians to have loans
Figure 54: Incidence of loans outstanding, by type of loan, by race/Hispanic origin, October 2011-November 2012
Black consumers are less likely than Whites and Asians to save and invest
Figure 55: Incidence of savings accounts, by type of savings products, by race/Hispanic origin, October 2011-November 2012
Figure 56: incidence of types of investment accounts and investments products owned, by race/Hispanic origin, October 2011-November 2012
Figure 57: Incidence of mutual funds/brokerage account ownership, by race/Hispanic origin, October 2011-November 2012
Figure 58: Incidence of mutual funds/brokerage accounts by primary firm, by race/Hispanic origin, October 2011-November 2012

The Unbanked
Key points
Unbanked are vastly different than banked consumers in many areas
Figure 59: Demographic profile of the Black unbanked consumer, October 2011-November 2012
The unbanked need help – they are unhappy with life and much less optimistic
Figure 60: Attitudes of black unbanked consumers, by banked and unbanked, October 2011-November 2012
Mismanagement of funds and lack of guidance hinder the unbanked
Figure 61: Unbanked consumers’ attitudes and behaviors toward personal finances, by banked and unbanked, October 2011-November 2012
The unbanked most likely live in multigenerational households
Figure 62: Role in paying bills, by banked and unbanked, October 2011-November 2012
The unbanked pay bills in person or by mail, using cash or money order
Figure 63: Methods used to pay bills, by banked and unbanked, October 2011-November 2012
Figure 64: Forms of payment used to pay bills, by banked and unbanked, October 2011-November 2012
One fourth of the unbanked say their finances are getting better
Figure 65: Personal economic situation compared to year previous, by banked and unbanked, October 2011-November 2012

Insurance Policies Owned
Key points
Black consumers more likely than White consumers to be uninsured
Figure 66: Incidence of ownership of health/life insurance, by race/Hispanic origin, October 2011-November 2012
Figure 67: Types of health/life insurance owned, by race/Hispanic origin, October 2011-November 2012
Black consumers spend more on health insurance and drugs
Figure 68: Distribution of average annual expenditures for healthcare, by race of reference person, 2011
Figure 69: Increase/decrease in household spending on medical expenses, by household income, October 2012
Blacks willing to pay more for health, yet 21% are uninsured
Figure 70: Diet and health, by race/Hispanic origin, October 2011-November 2012
Blacks weigh risks of getting ill with need for insurance
Figure 71: Attitudes about health and medicine, by race/Hispanic origin, October 2011-November 2012
Blacks more likely to have HMO and be insured by Blue Cross Blue Shield
Figure 72: Incidence of ownership of health insurance, by type, by race/Hispanic origin, October 2011-November 2012
Figure 73: Provider of health/life insurance, by race/Hispanic origin, October 2011-November 2012
Blacks are drawn to flexible spending and health reimbursement accounts
Figure 74: Type of health insurance savings, reimbursement or spending account held, by race/Hispanic origin, October 2011-November 2012
Black consumers more likely to pay for insurance out of pocket
Figure 75: How medical policy is obtained, by race/Hispanic origin, October 2011-November 2012
Marketers should reach out to employers who don’t provide insurance to reach Blacks
Figure 76: Method used to purchase health insurance policy, by race/Hispanic origin, October 2011-November 2012
Blacks more likely to have whole life than others – value of policy much lower
Figure 77: Type of life insurance policy owned, by race/Hispanic origin, October 2011-November 2012
Figure 78: Value of life insurance policy, by race/Hispanic origin, October 2011-November 2012
Figure 79: Average annual expenditures for CUs for personal insurance and pensions, by race of reference person, 2011
Property and auto insurance
Figure 80: Vehicle ownership, by gender and household income, October 2011-November 2012
Figure 81: Vehicle ownership new vs. used, by gender and household income, October 2011-November 2012
Figure 82: Amount spent on vehicle, by gender and household income, October 2011-November 2012
Higher-income Blacks more likely to have roadside assistance – AAA most common
Figure 83: Auto club membership, by gender and household income, October 2011-November 2012
Figure 84: Auto club company membership with, by gender and household income, October 2011-November 2012
Nearly all Blacks have auto insurance – fewer have homeowners or renters insurance
Figure 85: Property/Vehicle insurance owned, by race/Hispanic origin, October 2011-November 2012
Figure 86: Type of property/vehicle insurance owned, by race/Hispanic origin, October 2011-November 2012
State Farm and Allstate’s targeted marketing efforts pay off
Figure 87: Provider of property/vehicle insurance policy, by race/Hispanic origin, October 2011-November 2012
Figure 88: Method used to obtain homeowner\'s policy, by race/Hispanic origin, October 2011-November 2012
Value of homeowner policy lower for Blacks – driven by where Blacks reside
Figure 89: Amount of coverage on homeowner\'s insurance, by race/Hispanic origin, October 2011-November 2012
Small business owners are a significant opportunity for marketers
Figure 90: Incidence of other types of insurance carried, by race/Hispanic origin, October 2011-November 2012
Figure 91: Type of other insurance carried, by race/Hispanic origin, October 2011-November 2012

The Uninsured
Key points
Uninsured self-treat conditions and little is done to prevent illness
Figure 92: Attitudes about health and medicine, by insured anduninsured, October 2011-November 2012
Very few uninsured say things are looking better than a year ago
Figure 93: Personal economic situation compared to previous 12 months, by insured and uninsured, October 2011-November 2012

Marketing Strategies
The Rush Card – Visa Prepaid Debit Card
Figure 94: Visa Prepaid card ad, 2013
State Farm
Figure 95: State Farm ad, 2013
Figure 96: State Farm Life Insurance ad, 2013
Figure 97: State Farm Insurance ad, 2013
Wells Fargo Bank
Figure 98: Wells Fargo Bank ad, 2013
Figure 99: Wells Fargo Bank ad, 2013
Allstate

U.S. Black Population
Key points
U.S. population by race/Hispanic origin
Figure 100: Population, by race/Hispanic origin, 2008-18
Figure 101: Population, by race/Hispanic origin, 1970-2020
Figure 102: Asian, Black, and Hispanic populations, 1970-2020
Age
Generations by race
Figure 103: U.S. population by race, and by generation, 2011
Black population by age
Figure 104: U.S. Black population, by age, 2008-18
Figure 105: U.S. population, by age, 2008-18
U.S. Black geographic concentration
Figure 106: Black geographic concentration, by region, 2007
Black population by state
Figure 107: States with largest Black population, 2011
Figure 108: States with largest Black population, by distribution, 2008
Population by geographic concentration
Figure 109: States (including District of Columbia) ranked with the highest share of Black residents, 2011
Black metro areas
Figure 110: Metropolitan status of Black households, 2006 and 2011
Figure 111: Top 10 metropolitan areas with the largest number of Black residents, 2010
Black households
Figure 112: Average household size, by race/Hispanic origin/race of householder, 2001 and 2011
Figure 113: Presence and ages of children in the household, by race/Hispanic origin, 2011
Figure 114: Marital status, by race and Hispanic origin, 2011

Appendix – Additional Tables
Figure 115: Attitudes about financial services, by gender and age, May 2013
Figure 116: Attitudes about financial services, by gender and household income, May 2013
Figure 117: Attitudes about financial services, by household income, May 2013
Figure 118: Reasons payday loan/advance services are used, by payday loan/advance services brands used and frequency (nets), May 2013
Figure 119: Offline banking sources used by type of transaction, by age, May 2013
Figure 120: Online banking sources used by type of transaction, by age, May 2013
Figure 121: Offline banking sources used by type of transaction, by gender and age, May 2013
Figure 122: Online banking sources used by type of transaction, by gender and age, May 2013
Figure 123: Online banking activities by type of transaction, by banked/underbanked, May 2013
Figure 124: Offline banking activities by type of transaction, by banked/underbanked, May 2013
Figure 125: Attitudes toward the internet, by insured/uninsured, October 2011-November 2012
Figure 126: Online activities incidence and frequency for banking, financial information/stock trading, and medical services and information, by race/Hispanic origin, October 2011-November 2012
Figure 127: Online activities incidence and frequency for banking, financial information/stock trading, and medical services and information, by race/Hispanic origin, October 2011-November 2012
Figure 128: Online activities incidence and frequency for banking, financial information/stock trading, and medical services and information, by race/Hispanic origin, October 2011-November 2012

Appendix – Trade Associations

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