Worcester Business Journal

10 Worcester Business Journal • February 15, 2016 www.wbjournal.com A fter demand for its services led to almost unreasonable wait times at its two Worcester branches, Digital Federal Credit Union opened a third location in the city in November, where the staff has been busy educating people out of bad financial messes. This uptick in demand at all three DCU locations – on Tobias Boland Way, Shrewsbury Street and Gold Star Boulevard – is a heightened reaction to the financial illiteracy problems Scott McCarthy saw when he was managing the DCU branch in Framingham. People in that town, especially members of the foreign-born population, had a tough time telling the difference between a scam and a good financial deal. "One person had an auto loan of 300 percent. He had to drive to New Hampshire to make his car payments," said McCarthy, who manages the new DCU location on Tobias Boland Way. "They had no idea we could give them good credit advice." Serious financial knowledge gaps exist in Massachusetts across all age groups, according to a state-sponsored study in December on financial literacy across the commonwealth entitled "A Roadmap to Economic Empowerment." Massachusetts adults don't have access to the earning power, information and services they need to save for retire- ment, and because of this they find themselves juggling saving for their own retirement with supporting older family members and helping their chil- dren pay for college. In Worcester – with its large immi- grant population and a median house- hold income 30 percent lower than the state average – those problems are exac- erbated, giving businesses like DCU the opportunity to educate those people and attract them to credit union products that will give them good financial health. Because Worcester is classified as an underserved community by the National Credit Union Association, potential members don't need to have a business affiliation to join, McCarthy said. DCU established an education center in Worcester because of demand it saw for financial literacy. "It's amazing that we can help people in this way," he said. "We wanted to do this, and Worcester was the logical place to do it." Literacy push Credit unions have always been focused on enhancing financial literacy in the communities they serve, especial- ly since the financial crisis, said Paul Gentile, president and CEO of the Cooperative Credit Union Association, which serves Massachusetts, New Hampshire and Rhode Island. "This whole consultative approach is becoming more critical for credit unions as we help people with financial well- ness," Gentile said. Financial challenges disproportion- ately affect low-income populations, immigrants, senior citizens, veterans and women, according to the state- sponsored study. Immigrants who come from countries with corrupt banking systems are often hesitant to get involved with traditional financing products, especially since information about financial literacy isn't always readily available in multiple languages. Senior citizens, on the other hand, face an asset gap due to increases in the cost of living over their lifetime. The study reported that 63 percent of senior citizens can't meet their basic economic needs, and that number is higher for African-American senior citizen house- holds (81 percent) and for Latin Americans (91 percent). Worcester has a large immigrant pop- ulation – 21 percent of the city's popula- tion is foreign born, according to a study from the Seven Hills Foundation, and many of these immigrants, especially those who hail from Latin America, have low English proficiency and are there- fore more susceptible to credit-related scams. Currently, the new DCU branch in Worcester is holding a seminar on mobile banking, as well as a mobile deposit tutorial. In the front of a seating Worcester's financial illiteracy creates demand for credit unions BY LAURA FINALDI Worcester Business Journal Staff Writer n 48 percent of Massachusetts residents do not have emergency funds, compared to 56 percent nationally; n 54 percent of Massachusetts residents have not set aside funds for their kids' college, compared to 63 percent nationally; n 57 percent of Massachusetts residents have not tried to figure out retirement savings needs, compared to 59 percent nationally; n 17 percent of Massachusetts residents reported covering expenses and paying bills was very difficult (16 percent nationally), 40 percent of Massachusetts residents said it was somewhat difficult (42 percent nationally), and 41 percent of Massachusetts residents said it was not at all difficult (40 percent nationally). Source: FINRA Investor Education Foundation, U.S. Financial Capability Study for 2012 (last year data was available) Digital Federal Credit Union has found success in its new Worcester branch because the market population has greater financial needs. Here is a snapshot of how Massachusetts' financial preparedness stacks up to the rest of the nation. Financial needs Scott McCarthy, the branch manager at the new Digital Federal Credit Union on Tobias Boland Way, demonstrates an upcoming presentation on building credit. P H O T O S / M A T T V O L P I N I

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