By Kristin Quinlan,CEO of Certified Languages International (CLI)
Navigating financial transactions is tough, especially for the 1 in 5 U.S. residents who speak a language other than English at home. Language barriers hinder those with limited English proficiency (LEP), blocking access to crucial banking services and information about everything from business hours to loan terms and checking account options.
This represents a significant market opportunity for banks able to ensure that their employees can communicate with all potential borrowers, regardless of their preferred languages. Hispanics own 1 in 4 new businesses in the U.S., making them a key potential market segment for lenders able to meet their language needs. In addition, limited English skills are linked to lower homeownership rates, making homebuyers who speak a non-English language another potential market.
But while agencies and legislators want more translated resources for non-English speakers, no federal law expressly mandates that institutions conduct origination discussions in languages other than English. Yet the requirements and limitations of the Truth in Lending Act (TILA) can be fairly strict when interacting with LEP borrowers. And many states, like California, have their own guidelines.
That can make it difficult to know how to move forward. But some regional banks are leading the way in multilingual lending. They’re making banking more accessible with tactics that include buses that bring mobile banking service to the community and ensuring that they’re communicating how and where their LEP customers prefer, whether that be on a bulletin board at a local church or via WhatsApp. And they’re taking steps to ensure that mortgages and loans are just as accessible to their LEP community as to the native English speakers they serve.
Here’s how you can emulate their success to reduce barriers to better attract and serve the LEP community.
Gain a Deeper Understanding of Your Customers
Regional banks have their own niche markets, and they’ve built a successful business model by understanding their customers. They make it a priority to ask their customers what they need—and do so in their customers’ preferred language, whether it be via translated comment cards or “voice of the client” interviews. While regional banks have a more targeted customer base, larger national banks can similarly keep tabs on evolving language demand. They can also ask their customers about their language and communication preferences (and document that information in an easily accessible database). In some cases, it’s mandatory: As of June 2023, the Federal Housing Administration (FHA) requires lenders making FHA-insured mortgage loans to collect an applicant’s language preference on the Supplemental Consumer Information Form (SCIF).
Manage Risk by Focusing on Consistency and Quality throughout the Process
Banks need to make sure they are offering mortgage and lending product and services in a way that’s fair for all borrowers, regardless of the language they speak. But while banking is a highly regulated industry, there’s a lack of clear guidance from the federal government and regulators when it comes to how to accomplish this. If you’re translating origination materials or documents from English to another language and the new documents don’t meet the same standards, it can open you to risk. You don’t have to reinvent the wheel, though; the Federal Housing Finance Agency and the Consumer Financial Protection Bureau have already done some of the legwork by translating mortgage-related documents and educational resources into other languages, including Spanish, traditional Chinese, Vietnamese, Korean, and Tagalog. The CFPB also released a language access plan for LEP consumers. In addition, your language services partner is a valuable resource in helping ensure that you can fairly and effectively meet the needs of borrowers who speak other languages.
Minimize Misunderstandings through Culturally Competent Language Services
In banking, there are terms that don’t translate from one language to another. Many regional banks are taking steps to mitigate this challenge by providing interpreters who are able to explain the terms—for example, the interest rate or an escrow account—in a way that’s accessible to someone who comes from a country where loans and mortgages work differently. This requires not only knowledge of the language, but of the relevant culture as well.
Steer Borrowers Away from Relying on Ad Hoc Interpreters and Translators
Because there’s a lack of widespread support from lenders, many LEP borrowers seek out other ways to navigate the complex borrowing process. Many times, they turn to friends or family members to help interpret. But there’s a big difference between seeking advice to supplement information as a borrower and borrowers relying on their family—especially children—for language support. On a good day, most native English speakers can’t tell you what “escrow” means. So how do you expect an LEP borrower’s family member to do so? There’s a growing awareness among regional banks that providing high-quality translated documents and interpreters with industry-specific expertise can help ensure that LEP borrowers thoroughly understand the process and the paperwork they’re signing.
The Future of Banking: Better Service for the LEP Community
Obtaining a loan to buy a home or start a business can be stressful and confusing under the best of conditions; add a language barrier into the mix, and it can be enough to deter a potential customer altogether. By borrowing from what has worked for regional banks to remove language and cultural barriers, you can expand your potential market and provide great service to all customers.
