Big banks design their services for a large customer base, but in doing so, they may not meet the needs of historically marginalized communities. This gap creates opportunities for new FinTech companies rooted in these communities.
âRepresentation is so important in fintech,â says Asya Bradley, co-founder and COO of First Boulevard, a black-owned company providing education and financial services. “If you have a whole bunch of people who haven’t faced [a certain] situation, no one will build [solutions] for that.”
Fintech companies that offer banking services, often referred to as neobanks, have certain advantages in the banking industry. By partnering with licensed banks, they can offer their generally digital-only bank accounts nationwide and avoid branch management costs. This can benefit their customers in the form of lower fees and greater benefits than at traditional banks.
Here is a look at four neobanks on a mission to make a difference for people from different communities.
First boulevard: for black Americans
Nationwide protests over the deaths of George Floyd and Breonna Taylor at the hands of police have motivated fintech industry veterans Donald Hawkins and Asya Bradley to build First Boulevard to support their community.
âWe literally quit our day jobs, [and] we didn’t know if someone would fund us. Honestly, we felt like our children’s lives were on the line, âsays Bradley.
Backed by an initial $ 5 million from investors, First Boulevard takes a personalized approach to financial advice and offers based on transactions and other data, so that different recommendations would be given when a person pays off student loans by compared to when she buys a house. The company has an educational platform that Bradley says has a collection of short audio clips on personal finance. And First Boulevard provides bank accounts with features like real-time spending information, no monthly or overdraft fees, cryptocurrency debit card rewards, free access to ATMs nationwide, and cash back when buying from black-owned businesses.
“We all want people to create generational wealth” and keep “the funds flowing within the [Black] community, âsaid Hawkins, President and CEO.
See: 5 Ways To Support Black-Owned Businesses
The typical white family has eight times the wealth of the typical black family, according to Federal Reserve data. This wealth gap stems in part from banks and government programs that discriminate against generations of black Americans, for example through redlining.
First Boulevard began accepting some customers from its waiting list on June 19, observed on June 19, which celebrates the end of slavery in the United States. The neobank joins a growing list of black-owned banking companies, including companies such as Greenwood, MoCaFi and Wicket.
Cheese: For Asian Americans
Ken Lian, Co-Founder and CEO of Cheese, created this platform to help Asian Americans who have had banking experiences as difficult as his.
âOver the years I have paid thousands of dollars in [banking] fees and has been rejected countless times for basic bank accounts even though my FICO FICO,
the score was well over 800, âLian says. Scores above 800 are considered excellent and generally qualify customers for most banking products, as well as better rates. Lian says he doesn’t know why he was turned down.
Related: Asian Americans are still considered âforever foreignersâ. This keeps them out of the C-suite, says this professor
Cheese, named after a slang term for money, offers a rewards checking account with an annual return percentage of 0.3%, no monthly fees, two-day early direct deposit, and a nationwide network. free ATMs. Customer support is in English and Chinese, with other languages ââongoing, and people can contact the bank through the popular WeChat messaging app.
Cheese comes at a time when hate crimes against Asian Americans are in the national spotlight. The neobank is encouraging customers to support Asian businesses by giving up to 10% cash back on debit card purchases at specific retailers, which was added by popular demand.
Lian says the platform is working on accepting forms of identity verification in addition to social security numbers, making accounts available to recent immigrants. The Cheese app is available for iOS, and an Android version will launch this summer.
Also see: Use these powerful tools to find the right tone for money with your kids
Purple: For people with disabilities
Purple seeks to help people with disabilities save money without risking losing government benefits. The Supplemental Security Income program provides monthly payments to nearly eight million people, most of whom are disabled. And being in the program is a great way for many people to get health insurance through Medicaid. But to get the SSI, individuals cannot have more than $ 2,000, or $ 3,000 for couples, in total value on many assets, including bank accounts.
“Monthly deposit from traditional banks [or] the balance requirements are not sustainable for families who must navigate the asset limit, âsays John Ciocca, Founder and CEO of Purple.
He and his brother Christian are the team behind Purple and youBelong, a social media network that connects people with special needs and their families. Purple started out as a way to deal with the money management challenges that Christian and other members of the community face.
Purple offers a tax-efficient savings account known as the Achieve a Better Life Experience account. Established under a 2014 law, ABLE accounts allow people with disabilities to save beyond ISS limits and withdraw without penalty from purchases that improve their lives, such as housing and education. Unlike state programs that offer ABLE accounts, Purple hopes to be a national brand that makes this savings solution more popular and at a low cost of $ 3 per month. Purple also offers a free checking account where every debit card swipe sends money to the Special Olympics.
Daylight: for the LGBTQ community
About 5.6% of American adults, or at least 18 million people, identify as lesbian, gay, bisexual, or transgender, according to a 2020 Gallup poll. That percentage rose from 4.5% in 2017. But barriers still exist, especially for transgender and gender non-conforming Americans and the way banks identify them.
Daylight is a mobile banking account that prioritizes calls to people by whatever name they choose, even if it differs from their credentials. The name you choose appears on debit cards and in customer support channels. This service can protect transgender Americans from being nicknamed or referred to by a name given at birth that does not reflect their gender identity. Daylight also asks for client pronouns to ensure they are gendered correctly in all communications.
Lily: There is a new ETF focused on LGBTQ – here’s how it differs from two others that failed
The neobank, run by Rob Curtis, a gay man, and Billie Simmons, a trans woman, curates content for the LGBTQ community, such as blog posts on the costs of surrogacy, adoption and fertility for queer families. Clients can also get advice from a network of financial coaches who understand the needs of LGBTQ people. Daylight was launched last year in a limited testing phase; people wishing to register can register on a waiting list.
âWe see some fintechs, Daylight as a great example, with products you can’t get at a traditional bank,â says Hannah Calhoon, vice president of innovations at the Financial Health Network, a nonprofit that focuses on on financial stability for the weak – to low income communities.
âWe often find that the people closest to the problems are the closest to the solutions,â Calhoon says.
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Spencer Tierney writes for NerdWallet. Email: [email protected] Twitter: @SpencerNerd.