Pride NY

A new type of challenger bank, which is developing innovative financial products to better serve the LGBT+ community, is gaining ground across the globe. 

For the past decade, the corporate world has thrown its weight behind Pride Month, with multinational banks at the helm, to support the lesbian, gay, bisexual, transgender, plus (LGBT+) community.

Barclays, for instance, has been a partner of the annual Pride in London parade since 2013, first becoming the lead sponsor in 2014. HSBC became lead sponsor of World Pride in New York in 2019; and many other banks have sponsored pride events this year in multiple cities around the world during the month of June.

Aritha Wickramasinghe, a banking and financial services lawyer and equality director at legal charity iProbono, remarks that despite the kaleidoscopic fanfare from traditional banks, there seems to be “no alignment between policy and practice”.

“These major financial institutions that celebrate pride, change their logo to a rainbow filter, have all these inclusion policies and same-sex couples on their brochures, [they still] have policies that isolate us,” he says.

Policy versus practice

Mr Wickramasinghe, who banks with Standard Chartered as a priority customer, tells The Banker that his same-sex partner is not eligible for the extension of his priority benefits because they are not married. However, for the past three years he and his partner have been living in Sri Lanka where it is illegal to be gay, so marriage for them is impossible.

The Sri Lankan authorities continue to prosecute LGBT+ people for their sexual orientation and gender identity. While the police tend to enforce the law, there is growing resistance to it — not least from the country’s justice minister, Mohamed Ali Sabry, who last year condemned the police for forcing medical examinations on LGBT+ people.

If banks don’t create spaces which are inclusive... then they will become redundant dinosaurs

Aritha Wickramasinghe, iProbono

Another instance Mr Wickramasinghe cites is his dealings with insurer Allianz, which was referred to him by Standard Chartered. “When I was joining the insurance programme, there were a significant number of questions which asked about HIV/Aids and whether I was ‘engaging in activities’ that increased my risk of acquiring Aids,” he says.

Shocked at the invasive and prejudiced line of questioning, he raised this with Allianz’s Sri Lanka and Singapore offices and received no response. When contacted by The Banker, Allianz said that it had no record of receiving the complaint but were “very concerned” about a customer having such an experience. “We take discrimination in any form extremely seriously ,” says a spokesperson in Allianz's Singapore office. Standard Chartered told The Banker that it extends benefits “where the law recognises same-sex partners in marriages or civil unions”.

“I’m one of the most privileged in the LGBT community and one of the most capable to fight this with all my knowledge and legal resources, and yet I felt vulnerable and unsafe,” says Mr Wickramasinghe.

Discrimination and financial exclusion on the grounds of sexual orientation or gender identity are common in countries that criminalise homosexuality — but those that don’t are hardly exempt. Research by Iowa State University has found that same-sex couples in the US are 73% more likely to be denied a mortgage than their heterosexual counterparts.

Now there is a new movement of LGBT+ banks, which aim to provide banking products tailored for the LGBT+ community, redress homophobic and transphobic discrimination and build a financial system where they feel safe. As traditional banks also step up their efforts in addressing some of these issues, the clarion call for the banking industry to change is getting louder.

Finance, not rainbows

“What we find is that the kind of support that mainstream financial organisations offer us are floats at Pride and rainbows on cards. We don’t need [that],” says Rob Curtis, CEO of Daylight, a new US digital bank for the LBGT+ community. “We need cash, we need transitions, we need families, we need jobs.”

Launched at the end of 2020 in partnership with Visa and Marqeta, Daylight focuses on three main areas: evaluating the spending habits of its customer base; transgender inclusion; and peer-to-peer financial advice. It plans eventually to offer surrogacy loans for same-sex couples and transition loans for transgender people.

Mr Curtis says that in contrast to a common stereotype of the LBGT+ community as consisting of white gay men who enjoy six-figure salaries, incredible wealth discrepancies are still common — with black transgender people often unbanked or underbanked, for example.

Daylight allows its customers to use their chosen name on their credit cards without the legal and financial hassle that many transgender people find themselves embroiled in. Daylight co-founder Billie Simmons says that when she went to her credit card provider Capital One in 2017, it took her tens of hours and hundreds of dollars to get her ID name changed, not to mention having to explain she was transgender to five separate people: a teller, a doctor, a notary, a judge and a lawyer.

The experience was one of the reasons that led her to launch the challenger bank. According to a US-based National Centre for Transgender Equality survey, some 32% of transgender people face harassment, the threat of being attacked or denial of service when presenting ID documents, banking or otherwise, that don’t match their visible gender expression. 

Brazil’s first LGBT+ bank

Daylight is not the only bank aiming to combat discrimination in the financial services sector. In Brazil, Pride Bank became the world’s first LGBT+ bank, launching its beta testing in November 2019. It stemmed from the social mission to raise capital for non-governmental organisations (NGOs) and opened up for other customers in August 2020. Five percent of gross revenue is sent to its charitable foundation, Pride Institute, and evenly distributed to LGBT-based NGOs in Brazil.

Marcio Orlandi Jr, CEO of Pride Bank, attributes the rise of LGBT+ banks to two factors: the community has got stronger and more vocal; and the market for niche products is growing stronger thanks to the digitalisation of banking that removes the need for investment into branches.

“It was a lot harder to create a brick-and-mortar bank [specifically] for black people or women or LGBT+ [people], but now it’s easier because it’s digital,” he says.

The operation is not without costs, however, and competition with established digital banks is tough. The main challenge for Pride Bank is the large shadow cast by local giant Nubank, one of the world’s biggest digital banks, which has made all its transactions and credit cards free. It is also garnering a lot of investment – for example, in June, veteran investor Warren Buffett put $500m in Nubank.

“Pride Bank doesn’t have a [financier],” Mr Orlandi says. “It’s funded by its partners.”

Other players are springing into action, too. Superbia, an LGBT+ member-based financial organisation in the US, expects to launch this summer following a delay last year, when the pandemic forced it to change its plans. Its services will include credit cards, life insurance and healthcare insurance.

CEO Myles Meyers says that Superbia will represent a “holistic view of solving the issue of discrimination and intolerance”, including in areas such as credit card names, lending programmes and transgender healthcare.

Traditional banks

Elsewhere, in line with the recent push towards stakeholder capitalism, some banking giants are looking at LGBT+ issues. A year after Mastercard launched its True Name initiative, which allows customers to display their preferred name on their credit card, last October Citibank became the first major bank to roll out the initiative to its customers.

The kind of support that mainstream financial organisations offer us are floats at Pride and rainbows on cards. We don’t need that

Rob Curtis, Daylight

Pam Habner, head of US branded cards and lending at Citi, says: “It’s our responsibility to have a voice on issues that matter. That’s important because it’s the right thing to do, but also because this is what our consumers expect from us.”

Since its launch, more than 10,000 Citi customers have updated their name and an additional 200,000 or more have come to the bank’s website, says Ms Habner.

Despite being the lead sponsor for the London Pride parade, Barclays declined to comment on whether or not it was developing LGBT+ banking products. JPMorgan, which has recently hired a global head of LGBT+ affairs, said it was too early to respond to a request for comment on this issue.

Other markets for LGBT+ banks?

Beyond the larger markets of the US and Brazil, others are looking at offering more inclusive services. In 2019, Taiwan’s O-Bank launched its ‘524 O! My Rainbow’ initiative to provide preferential loans and mortgages to same-sex couples, including lower interest rate and discounted processing fees, after the country’s same-sex marriage law took effect in 2019. Taiwan remains the only Asian nation to recognise same-sex marriage.

A spokesperson for O-Bank says the bank is “quite open to [joining True Name] in the future” and that it “would keep observing the potential needs of the community and plan banking products accordingly”.

There is interest also in serving large but fragmented markets, where LGBT+ communities may have very different needs. Daylight, for example, “spent most of last year understanding the psyche of the [LGBT+] US consumer,” says Matej Ftáčnik, chairman of the board of the banking platform and CEO of software developer VacuumLabs.

Applying the Daylight model to the UK and Europe is tricky and requires more research, he notes, because of the presence of established challenger banks, the EU’s 27 different markets in addition to the UK’s, now outside of the bloc, and all the related regulation and paperwork, which make such a venture “more prohibitive”. “In Europe, an LGBT+ person in London has very different needs to an LGBT+ person in Romania,” he adds.

But if demand picks up due to the buzz generated by these new banks and the LGBT+ community becomes more vocal about its banking and financial needs, other propositions from traditional and digital banks may well follow.

“Banks have to be relevant,” says Mr Wickramasinghe. “If the other banks don’t step up and create spaces which are inclusive – truly, not just on [paper] – then they will become redundant dinosaurs.”


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