‘We were laughed out of a lot of rooms’: How Daylight and First Boulevard offer personalized banking experiences for underserved communities

As consumer demands have evolved through the pandemic, there seems to be a growing mismatch between what some customers want in their banking experience and what the incumbent banks are currently offering them. This has created space for the growth of a number of challenger banks that specialize in offering banking services to people and communities that have been overlooked and underserved by the mainstream financial industry.

A good example is Daylight, the first digital banking platform designed specifically for the LGBTQ+ community, an important market that remains largely unaddressed by most major banks.

Daylight’s co-founder and CEO Rob Curtis shares some eye-opening statistics to help drive home the importance of serving this growing demographic. The LGBT community in the US is already 30 million strong, making it the equivalent of the population of Texas, the second-most populated state in the country behind California. Every year, LGBT Americans spend around $1 trillion – approximately equal to the GDP of Mexico – and yet over half of them still struggle to maintain regular savings. Furthermore, one in five LGBT people of color are unbanked or underbanked, and the most financially underserved members are trans women of color.

“Despite common beliefs, LGBT people aren't all rich guys with no kids and disposable income coming out of their ears,” said Curtis at a session held during Tearsheet’s Big Bank Theory Conference. “The way that banks, financial institutions, and many brands address the LGBT community is by adding a rainbow to their social media, maybe posting a picture of two queer women during Pride month, and then selling us products that aren't really designed for us.”

Curtis says the financial needs of the LGBT community are growing as they gain social and legal recognition in many parts of the US. Yet, they still lack access to even basic financial services, such as loans for starting a family or support for gender transitioning. “As we are being given permission to live openly, we need new things,” said Curtis. “We're seeing an empowered generation of young people who have been told, ‘You were born this way, and you deserve everything good in the world’. The big banks are just too slow to deliver upon the promise that we’re making to our kids.”

Daylight was launched late last year to fill this gap in the industry. It provides customers with personalized services such as a Visa debit card in their preferred name (rather than their legal name), a network of finance coaches, tools to monitor and improve spending habits, and a space for donations to LGBT charities. The challenger bank also provides financial planning tools to support users in saving up for gender transitioning, parenthood, and retirement. 

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When Curtis first embarked on his Daylight journey roughly 18 months ago, he knew the road ahead wasn’t going to be easy. “When we were out there hustling for our first check, what we kept hearing was, ‘The market size is too small – who needs a niche? Why aren’t you serving everybody? What's the functional pain point you're solving?’ Clearly our offering wasn't as simple as a BNPL product. We were laughed out of a lot of rooms.”

Yet, a lot has changed in the last year and a half. Curtis says that over the course of the pandemic, people have caught on to the idea that community-focused banking can be a powerful tool, and the industry is moving towards differentiation and becoming highly verticalized. As a result, there is much greater opportunity for the growth of innovative solutions targeting the financial needs of specific segments of the population.

Ryan Falvey, co-founder and managing partner at VC firm Financial Venture Studio, refers to this trend as the growth of ‘curated fintech’, which is the idea that consumers are increasingly looking to curate their own individualized banking experience.

Falvey says the pandemic broke traditional patterns in consumer demands and behaviors. Instead of settling for broad-based solutions, customers are increasingly seeking out products and services that fit their specific requirements. Therefore, the next generation of fintechs are increasingly looking to serve more diverse customer bases. And since demand is growing, “niche” audiences – such as that served by Daylight – could potentially turn into major thriving markets in the coming years.

Another example of a challenger bank that caters to the specific needs of an underserved demographic is First Boulevard, which aims to tackle racial inequality in the financial ecosystem by addressing the generational wealth gap for Black Americans.

Co-founder and CEO Donald Hawkins explains that First Boulevard was created last year in the aftermath of the murder of George Floyd and the civic unrest around it, which coincided with the disproportionate impact of the pandemic on communities of color.

“I realized there were so many things that the Black community had been going through generation after generation,” said Hawkins. “Even on an individual level, my wife and I found out last year that we were pregnant with our second child. I kept thinking to myself, ‘Man, this kid is about to be born into a world with a lot of unacceptable things going on’.”

A few months later, Hawkins and co-founder Asya Bradley launched First Boulevard to address systemic racism and “help Black America reach some level of financial parity”.

Black Americans spend around $1.5 trillion every year in the US – a figure that would make them the 13^th largest country in the world by spending. However, Hawkins says less than 3% of those funds stay within the community, since so many of its members don’t have access to proper banking services.

First Boulevard focuses on helping the Black community reclaim its economic impact by incentivizing users to spend money and circulate it within the community. It offers benefits such as passive wealth-building features, early wage access, spend control, round-ups to help users save towards paying off debt, and rewards for spending money at Black-owned businesses.

An important area of focus for First Boulevard are millennial women. Hawkins believes that providing them with the necessary tools to build wealth from a young age could have a positive impact across all generations, from Baby Boomers to Gen Z.

“Black millennial women are the financial leaders of the community. Their parents rely on them for insights and feedback, and their younger Gen Z brothers, sisters, nieces and nephews look up to them for advice, because they're the ones really leading the charge,” said Hawkins. “If we can show as much love and support as possible to Black millennial women, we may be able to provide the financial education and support needed for those younger generations, so they don't get into the same trouble that so many of us did.”

In the coming years, Hawkins hopes his team’s efforts will not just improve the financial situation of Black Americans, but will also create ripples within the wider community among founders in other industries that suffer from unequal access, such as healthcare, education and technology.

Daylight’s Curtis also has grand ambitions for his company’s future. Since the problems faced by the LGBT community are universal, Curtis says he’d like to see Daylight establish a global footprint and reach LGBT people all around the world.

“Our mission is so much bigger than any individual on our team because of the potential we hold in our hands to influence the future of our entire global community of half a billion people,” said Curtis. “For the next decade, our goal is to have a Daylight card in the hands of queer people everywhere the sun shines.”