‘For us, Pride never stops’: Financial services emerge to serve the LGBTQ community
- Despite years of being underserved, the LGBTQ community has new banking options.
- Incumbent and fintech firms are creating products and services focused on the specific needs of the LGBTQ community.
LGBTQ banking and financial services are increasingly emerging among challenger and traditional banks. Banks are recognizing the financial significance of targeting LGBTQ consumers who hold massive spending power, estimated to be around $1 trillion. Despite recent advances, financial institutions and the banking industry still struggle with systemic bias and discrimination.
“LGBTQ people have to make compromises to operate within a financial system that wasn’t designed for them, and as a result, excludes them,” said Billie Simmons co-founder of America’s first LGBTQ digital bank Daylight. “Within the banking system itself, we face three to eight percent lower mortgage approval rates, indicating systemic LGBTQ bias. We pay higher fees, up to $86 million per year more than non-LGBTQ people, and financial institutions struggle to build products tailored toward our needs.”
Created by members of the LGBTQ community, Daylight offers an array of financial management tools such as access to finance coaches who specialize in LGBTQ life events and money management, a unique finance feed tailored to fit individual needs, advice on spending habits and options for customers to select their preferred name on their Visa card. The LGBTQ community has to deal with a lot of circumstances that put considerable financial strain on people — things like lower incomes and workplace protections, higher debt and expensive transitioning, family planning and HIV health management costs. LGBTQ millenials are less likely to feel confident about their current finances and retirement prospects as compared to straight and cisgender millennials. 50 percent of straight millennials expect to feel financially secure during their retirement, compared to 38 percent of LGBTQ millennials.
Daylight wants to redeem LGBTQ banking experiences. “We’re rethinking and redesigning the relationship our customers will have with their bank,” said Simmons. “Why shouldn’t your banking partner help you navigate access to surrogacies, partner with you to improve your financial literacy, or ensure that your travel insurance doesn’t reject your claims when you’re travelling in countries with anti-LGBTQ laws?”
In the same vein as Daylight, startup LGBTQ financial services site and credit union Superbia is planning on releasing banking services for its customers. The company is also expanding into health insurance, life insurance and money management services to counter discriminatory practices in the financial services industry against the LGBTQ community.
“A slight change in manner occurs during a traditional banking experience, when the representative becomes aware that you are part of the LGBTQ community,” said Superbia’s founder, Myles Meyers. “Overall, the experience lacks an affirming environment for people in our community. So, the experience feels different, looks different and is different – creating estrangement. 60 percent of the community feel that financial institutions don’t want to help people like us. Superbia is changing that.”
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