#digital #banks #minorities #Daylight
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“For some people, specialized banks can be Key” — Paul Ebeling
Billie Simmons has co-founded Daylight, an online banking provider focused on the LGBTQ community that is set to launch this Summer.
Among its features, it allows users to set up an account online with their chosen name, regardless of what appears on their ID documents, and receive financial coaching focused on goals common among many LGBTQ consumers, such as saving for surrogacy or adoption.
Daylight estimates there are 30-M Americans who identify as LGBTQ. It is among a group of new digital banks in the US targeting communities where many people say their needs have not been met by mainstream lenders.
Such startups include: First Boulevard and Greenwood, both focused on serving Black Americans, Cheese Financial aimed at the Asian community and Majority serving immigrant groups.
“Historically, community banks have focused on cheaper customer acquisition by focusing on an underserved geography,” said Ian Kar, Founder/CEO Fintech Today.
“The internet removes geographical restrictions. Developing banking services around people’s identity, like race and sexual orientation, is a modern approach,” he explained.
Digital banking startups that target specific demographics raised a collective $318-M from investors in Y 2020, according to data provider CB Insights.
And they have raised $86-M in 8 deals in Y 2021, including a $40 million cash injection for Greenwood from US financial institutions including Truist Financial Corp (NYSE:TFC), JPMorgan Chase & Co (NYSE:JPM) and Bank of America Corp (NYSE:BAC).
Notably, Cheese Financial, a digital banking service for the 21-M Asian Americans is designed to be accessible for customers with no credit history, the company is also working on being able to take on new customers without requiring a US social security number. It offers 10% cash back at more than 10,000 stores and Asian-owned businesses and has pledged to donate $10 for each new user to a non-profit organization focused on helping the community.
Given the challenges facing such entrants into the competitive digital banking market, success hinges on how quickly they can grow their customer base by building a brand that resonates as authentic with the communities they aim to serve,
Have a healthy week, Keep the Faith!