A digital bank for the LGBT community
The millennial founders of Daylight, a digital banking platform for the LGBT community, are solving the problems they face themselves with everyday banking and finances.
To start, Rob Curtis and Billie Simmons, who co-founded Daylight this year, are rolling out their app and Visa prepaid debit card to 100 alpha users in December. The debit card was built with the card-issuing platform Marqeta and will let customers use their chosen names rather than their legal names and create savings goals. The card is issued by a federally insured bank Curtis and Simmons can’t name yet.
They are also forming an online community where users can get advice from their peers, schedule sessions with LGBT financial coaches and read content that covers money management issues specific to this community, such as the unique costs of transitioning, starting a family and retirement. The team received resources, marketing help and other support from Visa as part of its Fast Track program, through which it helps fintechs that are ready to issue cards and have held at least a Series A funding round or have raised more than $1 million to quickly join the Visa network.
Several years ago, when Curtis, former managing director of the dating site Gaydar, met with an LGBT financial adviser for the first time, “I suddenly began to realize the impact money had on my life and how my LGBT status had a significant bearing on my money habits,” he said.
A 2018 survey of 1,519 Americans in their 20s and 30s conducted by TD Ameritrade found that LGBT millennials have a significantly lower household income than their straight counterparts. Straight millennials are likelier to own homes, report feeling more financially secure and feel prepared to make good financial decisions.
Before its public launch in the first half of 2021, New York-based Daylight will introduce a checking account. Participants in the alpha launch were largely sourced from a Slack channel called Out In Tech for LGBT professionals in technology.
In an interview, Curtis and Simmons, whose background is in marketing and software engineering at fintech-focused companies, spoke about the unique issues facing LGBT consumers, where traditional banks fall short, and how their platform will meet the needs of their peers.
Why did you create Daylight?
ROB CURTIS: It’s really common for companies to treat LGBT people as a marketing segment. But when you get under the skin of what our real needs are, they are much more complex. We are subject to lower levels of family support and one-off costs, like transitioning. For lots of reasons around family dynamics, we have lower rates of financial education and struggle to maintain regular savings. Rather than spending money advertising to us and putting rainbows on things, we need a financial services industry that helps us to address the reasons behind all of those pain points.
Some of the disadvantages that LGBT people face are rooted in things like risk models. There are not generations of LGBT couples paying off their mortgages. We will be flagged as higher risk, meaning we will be subject to higher rates of mortgage rejection. We see things around false positives in the know-your-customer process for trans and nonbinary folk who may have different genders or names on their identity documents that are connected to their Social Security numbers. In the customer service layer, I’m often asked what my wife does.
How will Daylight meet those needs?
BILLIE SIMMONS: We learned through conversations in the community that trying to navigate adoption or surrogacy or gender transitions can be a confusing and lonely experience. Members will be able to get advice from LGBT people who are going through the same things. We also have access to financial coaching from LGBT coaches to help you get your money habits in shape. Our special sauce is empathy and understanding. We are a team of queer millennials who have lived these problems and have the life experience and technical expertise to solve them.
What sort of content and financial tools are you offering?
SIMMONS: We’re working with Visa on financial education content that has been rethought with LGBT people in mind. When you’re educating someone who is non-LGBT about paying for retirement, it’s mostly about how much money do you need to save and how will you prepare your finances accordingly. For an LGBT person, there are added costs. Most LGBT people want to retire somewhere where they won’t have to be back in the closet, so that may mean retiring in a metropolitan city or in an LGBT-specific retirement home. Parenting and family planning is a very complex thing to navigate. Where will you raise your child? What are the state laws in that area? We are thinking holistically about the full life span of an LGBT person, where being LGBT will affect their finances and goals.
CURTIS: We spoke to more than 1,000 LGBT people as part of our early research. One thing that came out strongly is LGBT people associate money with equality and freedom. We are looking at a different type of relationship with members than a traditional neobank. Rather than focusing just on payment pain points, we are looking at unique life events and how we can help them solve them end to end, from best-in-class surrogacy providers to retirement to transitioning.
Why is it important to let people put their preferred names on the cards? How does this work with Daylight?
SIMMONS: I’m a trans woman. I’ve legally changed my name and gender identity. If I want to update that at my bank I typically have to get legal documentation from a court, get documents notarized, get letters from doctors and bring it in person to a bank branch, effectively outing myself as trans and putting my safety at risk. It also costs a lot of money.
One current option is to get your legal name changed, bring that documentation in to your incumbent bank and have that card reissued with your legal name. This is an expensive procedure that effectively requires you to out yourself at different stages. It’s also very time-consuming and emotionally strenuous. Another option we’re seeing is to put your preferred name on the card that doesn’t match your legal name. But these options are not thinking about the holistic end-to-end process. For one of the products on the market, you have to sign up, receive a card in your deadname [the name given to a transgender person at birth], cancel that card and then ask for a card with your preferred name on it. You’ll receive a bunch of emails and letters with your deadname throughout this process. Being confronted with your deadname is traumatic for many trans and nonbinary people.
Being able to put whatever name that is authentic to you on your card is of the utmost importance. But we don’t want our customers to deadname themselves multiple times throughout the process. We want them to be able to sign up with their chosen name, only briefly surfacing their legal name for the KYC process. They will only ever be referred to by that name in the app and by customer support individuals. They will be able to change the name when they want to and have it update across all of our systems automatically.
How will Daylight make money?
CURTIS: We see our revenue streams evolving over time. We will generate money from interchange revenue on spending, but our purpose is to help people prepare for their futures. We’re starting with financial coaching, which will be on a paid basis. As we expand, we’ll generate affiliate revenue from other products. There are lots of best-in-class products for LGBT people, such as travel insurance and loan products, but these companies have a challenge becoming top of mind for customers. We see our advantage as being highly trusted, with great data about LGBT people’s spending behavior. So when they're booking a holiday, we can offer them travel insurance, and they're not going to be refused a claim because it was in Dubai, where being a same-sex couple is unlawful.
How can traditional banks meet the needs of LGBT people?
CURTIS: Banks need to move beyond this paradigm of treating us as [a] marketing [segment] and start thinking of us as individuals with unique needs. That means getting their hands dirty on the hard work of speaking to people and building products designed for them. The difficult bit is getting into risk models, asking why is it I’m flagging a trans person as higher risk during know-your-customer checks and why are we declining same-sex couples during mortgage approvals.
SIMMONS: A lot of people’s preconception [with preferred names on cards] is “won’t people use this to commit card fraud,” but it’s the wrong kind of thinking. It’s not understanding the LGBT community. [Change] can only be done by having conversations with the community and being open to recognizing where they got it wrong.