There has been an explosion of digital banks that are targeted at certain demographics over the last year. Nearly all banks are trying to serve certain populations who feel left out of traditional financial institutions.Daylight, a New York-based neobank, is the latest to be created. It claims it is the first LGBTQ+ digital bank platform in America. Pride Bank is a Brazilian digital bank with similar missions.Daylight was founded by Billie Simmons (CEO), Rob Curtis (CEO), and Paul Barnes Hoggett, a transwoman (COO), and today announced that it had raised $5 million in seed funding. The round was co-led by Kapor Capital, Precursor Capital, and Citibank.Daylight claims its mission is to create a more equitable financial lifestyle for LGBTQ+ people and their families.The startup was founded in 2020. It plans to use the new capital mainly to expand its flagship product, lifestyle services and financial equality for the 30-million+ Americans who identify themselves as LGBTQ+. It plans to create a LGBTQ+ marketplace and platform that rewards members who shop with merchants who support the LGBTQ+ community.Curtis spoke with TechCrunch about why Daylight is uniquely placed to assist the population with issues such as high debt accumulation, pre-existing conditions, lower levels of insurance, HIV management needs, and [gender] transformation costs. Many people in the community have lower incomes due to workplace discrimination.Curtis stated that LGBT people have a different approach to money. There are many reasons why this is so. While we spend roughly the same amount of income on discretionary spending, we are about 20% less likely than others to have a savings account and 20% less likely that stocks or mutual funds are investments. We estimate that about 30% of our community does not have any estate planning.Curtis also believes that life is more expensive for LGBTQ+ people.He said that it is costly to be queer. We find out that 40% of us don't have the financial support we need to pay for college or make the transition from childhood to adulthood. The amount of college debt we have increases by 50%. There are also higher sexual health costs, and some need to have gender affirming surgery.Curtis said that by the time we reach our 30s, you will have the option of having one of three things: a gender affirming operation, a home deposit, or a child. A child is more costly for this group because they have to either adopt or hire a surrogate.Brian Dixon, Kapor Capital Partner, believes Daylights founders have had to deal with problems in traditional banking. This gives them insight that can be used to help other members of the LGBTQ+ community.One problem is friction with the names on cards. This can lead to trans people being identified. Dixon also believes that the population lacks adequate financing products for surrogacy, IVF and adoption as well as transition support and mental healthcare.Dixon stated that many neobanks don't offer a unique banking experience, which will lead to a mass exodus of traditional banks. Daylight is an exception, given their community focus. Daylight's unique features include seamless card issuance that allows transgender and non-binary customers the opportunity to order cards in their preferred names, book sessions with financial experts, receive peer-to-peer advice via their digital community, and earn rewards that are meaningful for the LGBT+ community.Curtis says Daylight will provide features like a checking account and the ability to receive payments two days earlier, as well as free ATMs and no hidden charges.He said that he believes that it is important to pay your bills early because credit card declines are very common for hormone-buying customers.The Daylight platform also offers personalized recommendations that alert members when they spend money with merchants who support anti-LGBTQ+ politicians or initiatives.Curtis stated that LGBTQ+ consumers and their supporters are very conscious about where they spend money. However, it can be difficult for individuals to determine if they're buying in line with their values or if they're shopping with brands that engage in rainbow washing and fund politicians and projects that are against our interests.Daylight is currently in beta, but already has thousands to thousands of customers on its waiting list, Curtis said. He estimates that Daylight will have 10,000 customers when it launches in October.Fair, a multilingual online bank and financial platform that targets specific demographics, has raised funding in the past year. It was launched after raising $20m in just 40 days. Greenwood, First Boulevard and Cheese are just a few of the others that have emerged.
