For the LGBTQ+ community, money issues are often impacted by identity – 62% of respondents in a survey by consumer credit reporting company Experian said they'd experienced financial challenges because of their status as an LGBTQ+ person.
Often, people turn to alternative financial products, which haven't been set up specifically for this community, to serve fundamental needs. For example, trans people often turn to crowdfunding sites to raise money for surgeries, despite the extra service fee. Strategies like this show that the LGBTQ+ market is still under-served, despite having a collective annual spending power of $3.9 trillion worldwide, according to 2019 estimates by LGBTQ+ corporate advisory and asset management firm, LGBT Capital.
A number of specialist financial services are now popping up to meet this community's specific needs. Some issues are relatively straightforward to solve, but are a headache to navigate with traditional banks. For example, Daylight, an LGBTQ+ banking app, offers users the ability to choose whatever name they want on their card. High-street banks usually make changing a name and gender marker an onerous process, causing stress and harm to trans clients. They claim this is due to concerns over fraud, but Daylight has had no issues. The platform is also creating a feature that alerts users when they're spending with queer-friendly or queer-hostile companies.
Other services are focused on more specific financial goals outside the traditional ones. Jiko, a fintech startup, has partnered with transgender-focused tech suite Euphoria to launch Bliss, a service specifically aimed at helping people save money for costs related to their transition. Users can choose from a library of 1,000 different goals (such as ‘start HRT’) or create their own. Bliss invests saved money in treasury bills to reduce risk and users can take money out at any time without fees or delays.
There are still plenty of problems to be solved. Housing discrimination, wage discrimination and lack of career advancement are all issues that the LGBTQ+ community faces. But while high-street banks are yet to think bigger and target this valuable market, there's an opportunity for new fintech services to step in.
Behind the bank
Billie Simmons, co-founder and COO of LGBTQ+ digital banking app Daylight.
How is the LGBTQ+ community under-served by and excluded from financial services?
A. ‘Generally, the large traditional banks don't even think about us outside Pride month. I'm a trans woman and I transitioned while living in America. I've experienced first-hand how banking is just not designed for people like us. The process to get my name and gender marker updated on my account was really long-winded. I had to out myself multiple times, which is risky. It cost me lots of money and was an imperfect solution. Still to this day, I have to use the username that was originally assigned to me, which was based on my dead name. When we think about building products for Daylight, we do it with the community first and foremost in our mind.’
How did you make sure your features meet the community's needs?
A. ‘Our whole team is part of the community and we have an amazing group of about 500 beta testers who have been on this journey with us, trying out products, giving us their time, energy and feedback. They represent diverse identities, backgrounds and locations. My needs as a white, middle-class trans woman in New York are very different to those of a black trans woman in Arkansas. It's important that we get a range of perspectives and let the community lead the way.’