When Billie Simmons needed to change her name on her bank card, she visited the financial institution to make the request. For some, it would have been merely an inconvenience, as the banking industry is legally bound to prove people are who they say they are. But for Simmons, it effectively meant outing herself as a trans woman to a bank employee. Nor did the name change end all her banking headaches.

Simmons secured a new card with her name, but was unable to update her username to access her digital account. Banks are known for running on dated technology platforms that make even small requests often impossible to resolve in a timely manner. “Every time I logged into my banking platform, I had to deadname myself, which is to use the name that I used before I transitioned,” Simmons says. She also received emails from her bank that used her former name.

“These are really emotional things for trans people,” Simmons says. “These are painful reminders of their history they really want to avoid.”

There are many banking products trying to make financial services more accessible, but persistent service gaps can still make the experience lousy at best and discriminatory at worst for some — including the estimated 14 million lesbian, gay, bisexual, transgender and queer or questioning adults in the U.S. This group often is faced with added complications, such as tackling steep costs associated with, say, having a baby as a same-sex couple or lenders denying same-sex couples’ mortgages at a higher rate than heterosexual couples.

“This is clearly a group with specific needs from financial institutions and those needs are not being fulfilled,” says Tyler Griffin, co-founder and managing partner of Financial Venture Studio, a venture capital firm that invests in early-stage fintech companies.

That stands to change thanks to an emerging area of digital banking that is rethinking the conventional rules. Banks, credit card companies and fintech startups are flexing their brainpower and willingness to improve banking services to win over an underserved LGBTQ market with an estimated combined buying power of roughly $1 trillion.

A mobile banking LGBTQ startup is born

Recently, Simmons teamed up with Rob Curtis to create Daylight (formerly Be Money), a mobile-first banking startup designed by — and for — the LGBT+ community. At launch, Daylight will include Visa-branded prepaid cards in customers’ preferred names as well as a social tie-in. Customers can connect with fellow members and financial coaches who specialize in LGBTQ issues. The account will also come with more traditional features like the ability to set savings goals on the mobile app and no minimum balance requirement.

The brand, developed in partnership with Visa’s Fintech Fast Track program, debuted in November and is readying to test its services with a small pool of customers this month. While it’s very early days for Daylight, the startup sees a big opportunity to make a mark on an underserved market few financial services companies have pursued.

“Incumbent banks have had plenty of time,” says Daylight co-founder and CEO Curtis, who previously served as the managing director of Gaydar, a dating site for gay and bisexual men. “They had an incumbent advantage and a lot of money. They spent it largely on marketing. …We are here to fix it.”

The financial cost

Nowadays, all kinds of digital tools exist to try to democratize finance. But millions of Americans are wrestling with vanishing incomes due to a deeply troubled economy hurt by the pandemic.

For members of the LGBTQ community, the financial challenges are starker.

LGBTQ Americans are more likely to live in poverty, lack access to adequate medical care, paid medical leave and other necessities. And those headwinds could put them more at risk during the pandemic compared to the general population, according to the Human Rights Campaign Foundation’s analysis.

The goal of Daylight creators is to fundamentally change the system and create a banking experience that welcomes individuals from all income levels — including figuring out ways to serve individuals who’ve never been banked before.

“How can we bring those people into our platform and give them financial stability — potentially for the first time,” Daylight co-founder and chief of staff Simmons says. “How can we partner with best-in-class services to give them credit cards, so they can build a credit rating so that they can eventually get a mortgage and find housing stability.”

An emerging trend in banking

These are still many unanswered questions and problems to resolve in order to better serve the market. But more companies are trying to help the community in newer ways.

For more than a year, BMO Harris has let customers pick their preferred name (rather than necessarily their legal name) on their cards through Mastercard’s True Name initiative. The Chicago-based bank, which made the feature available to debit and ATM cardholders in 2019, expanded the rollout in June to include credit cardholders and small business debit and credit cardholders.  In October, Citibank became the second bank to launch the same feature on eligible U.S. credit cards.

They won’t be the last.

Superbia, a new LGBTQ financial marketplace startup with a charter approved by the state of Michigan to open a credit union, will introduce its products with the True Name feature.

“Having to carry a card that has your deadname because it is the only way to align to your government-issued ID is a very personal and hurtful component of a person’s life,” says Myles Meyers, founder and CEO of Superbia. “To remove that from their experience, that is affirming to that person.”

But like Daylight’s co-founders, Meyers’ ambitions for Superbia are much grander.

“It is our vision to earn the place of being the safe space for the (LGBTQ) community in financial services,” Meyers says. “We can only do that if we have the control and the ability to offer the service, the product and an experience that is guaranteed to be free of discrimination (and) intolerance.”

Superbia’s original plan to launch a national credit union in 2020 was delayed due to the pandemic. In July, Superbia debuted its association and will make benefits available ahead of launching commercial products.

It has not abandoned its credit union plans; the credit union is developed, but Meyers says there is work left to be done to get the final greenlight. “We are waiting for final provisions of our charter to be satisfied so we can receive the approval to begin to operate,” Meyers says.

Why there’s a need for an LGBTQ bank

The incumbent banks have made strides in acknowledging the LGBTQ community, but representation remains a big issue for banking.

“Traditional financial services is still run by straight, white men and so there are some challenges that the community has in trying to be able to get loans [and] get approvals for various banking services,” says John Auten-Schneider, co-founder and co-owner at Debt Free Guys and host of Queer Money podcast. “Even just setting up an account is a daunting process for some people, especially if you’re trans and your birth certificate doesn’t necessarily match your drivers license.”

A new era of digital brands created for the LGBTQ community could especially prove useful to individuals who live in small towns.

“Your job security and (possibly your) life are at risk if you come out,” says David Auten-Schneider, co-founder of Debt Free Guys and host of Queer Money podcast. “So you don’t even want to go to the Bank of America or the Chase or the Capital One that’s right there in your town. Because you don’t know who they know when you open an account and (name) your beneficiary, or you open an account with someone and list them as your spouse. You don’t know who will say what to who.”

Knowing there’s a need for serving the LGBTQ community, though, doesn’t make the likelihood of success any greater for financial companies with unknown brand names. The idea of testing a bank for the LGBT community has been done before and the newest disruptors are just getting started.

Right now, you can sign up to be on Daylight’s waitlist. You can also join Superbia’s association. One day, you might be able to find surrogates through Daylight or access credit through Superbia in a way that’s different from how traditional underwriters would evaluate you.

As Daylight and Superbia build their products and services, the disruptors will face challenges. Startups fail all the time and they are targeting an industry known for keeping its customers for the long haul. The average U.S. adult has used the same primary checking account for more than 14 years, according to a Bankrate survey. What’s more, the digital banking market has never been hotter for all kinds of products aiming to improve consumers’ financial health.

As CEO of Superbia, Meyers isn’t worried about demand. He’s already seeing lots of interest from consumers signing up for the association. To him, Superbia will do what traditional financial services have failed to do: expanding financial services to a group of people who have been mistreated or underserved by existing products and services.

“This is really about solving issues for the community,” Meyers says. “The world does not need another bank or another insurance company. There are plenty. The world needs one that is dedicated to the community.”

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