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From Affinity to a Major Market Shift: How Banking is Changing from Inclusion to Action

In our industry, we’ve long talked about the phenomenon of “affinity banking,” a concept tied more to marketing than to actual service of a community’s interests.

In recent years, thankfully, we’re seeing a slight shift from thinking about our customers as niche markets for us to tap into and toward seeing a community we can be part of and serve through our companies. At Daylight, we’re proud to be on the frontlines of this shift, pulling the banking industry forward with us.

Technology and the changing way we live our lives have changed the meaning of the word “community.” 

A community bank used to be the one down the road from your house. Now we have an opportunity to create a banking community through a platform that serves the types of people who need it most. In our case, that means banking for the queer community — wherever you are.

Our COO, Billie Simmons, recently sat on a panel about this shift in banking at Money Experience Summit alongside fellow founders Yemi Rose of OfColor and Andrei Cherny of Aspiration.

Riding the waves of social change

The uprising following George Floyd’s murder in 2020 was a long-awaited wake-up call for many companies and corporations to finally realize the importance of social responsibility — at least, the appearance of it.

And that created an opportunity for financial startups, which rely on the larger banking industry and infrastructure.

“That has sort of worked to allow startup founders to get a leg up and to start to partner with some of these organizations,” Billie said.

We have no illusions that these corporations partner with community-focused companies like ours out of the goodness of their hearts. They understand it looks good in a press release and they understand that inclusivity is an actual business advantage.

“I think that’s fine,” Billie said. “If that’s what they get out of it, we can also get a ton out of it, too. And if we can empower our community financially, using the opportunities that are available to us, then great, that’s fine.”

Banking like a gay bar

We’re clear at Daylight that everyone is welcome — as long as you’re not a dick. You don’t have to be a member of the LGBTQ community to use our platform or to support the financial success of queer folks.

So how do we maintain a safe space for the community we serve while welcoming allies who want to join us?

“It’s like a gay bar,” Billie said. “Anyone can go into a gay bar. If you’re going to be an asshole, we will kick you out. If you’re going to be cool, and support everyone there, then that’s great. You can join.”

Doing the most good

Despite an onslaught of companies that want to clean up their image by supporting LGBTQ causes, we face an unfortunate reality: We literally aren’t able to restrict who we work with to organizations that have never worked against the LGBTQ community. 

Put simply: Not enough of them exist.

For centuries, we’ve lived in a world where it’s been socially acceptable to be outwardly homphobic and transphobic, and that’s only slowly changing in a few areas. 

So how do we operate in a way that serves our community and aligns with our values?

“It’s about taking a nuanced view,” Billie said, “how can we do the most good for our community, while understanding that there are always going to be tradeoffs? Where can we refuse to make those tradeoffs? Where can we drive change from within?”

Building community through storytelling

All of us who provide banking platforms for communities who’ve been historically underserved by banks and financial institutions know we face a challenge when it comes to building trust, even within our own communities.

Here? We do it by sharing our own stories.

Billie shared hers: “I started Daylight because I am a trans woman who transitioned in America, and it was a fucking nightmare to change my name on all of my debit cards, on my bank accounts, and I still have one credit card that I have never updated my legal name on because it was so hard to do.”

We share the stories of our founders, our majority-LGBTQ team, our customers and our partners. Because we know those stories matter.

We know they matter, because they drive the kinds of services we offer, and we hear from our customers how that affects their lives.

When customers tell us how important it’s been to be able to use their chosen name on their debit card, so when they get coffee with coworkers the barista calls out the correct name from their receipt, those stories are powerful. That’s more than putting a rainbow on a card. That’s having an impact on someone’s daily life.

“Particularly for the trans community, money is the gateway through which we self actualize,” Billie noted. “It costs a lot of money to transition [medically]. And that is really emotional. I think the only way we can [build that trust] is just by telling our stories.”

It’s more than a marketing campaign

Andrei called out a recent study that showed 25% of Americans think first about issues like sustainability when they choose a financial product, before details like interest rates.

The three biggest banks in the country each have about 10% market share — which means the “niche” for affinity banking is bigger than any of them. 

And when you factor in the size of the LGBTQ community, the BIPOC community and millions of other folks underserved by traditional banking, that adds up to a big need for platforms focused on serving communities.

That means community is no longer just a way to market our services. Serving our community is fundamental to the way we operate — and we’re hellbent on moving the industry forward with us.

“There’s still some idealism in me,” Billie said. “I think I can actually make some change with some of these large organizations. … There’s 30 million LGBTQ Americans, and all of those people have friends, have supporters, have families, have children, and there are the parents of queer children.  There’s actually a huge, huge community of people who are committed to LGBTQ liberation.”

Dana Sitar is a personal finance writer, editor, writing teacher and owner of Dana Media. She’s written about work and money for Forbes, the New York Times, CNBC and Inc. Magazine. She founded Healthy Rich to publish stories that illuminate the diversity of our relationships with work and money.

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Daylight News The Issues

Homeownership, White Supremacy and the LGBTQ Community

One of the most common ways to build wealth in the United States is through homeownership. 

Unfortunately, communities of color, and Black families in particular, have been systemically prevented from buying homes in cities around the country. For decades, practices like redlining, racial steering, and racially restrictive covenants gave institutions and social networks the legal basis to discriminate against groups of potential homebuyers.

HOLC and Redlining

In response to the Great Depression, Franklin D. Roosevelt signed into law the New Deal. 

Through this package of legislation, the Home Owners Loan Corporation (HOLC) was launched to help homeowners who’d defaulted on their mortgages. This is the era that brought the 30-year mortgage and low fixed interest rates that are still common today. 

In its first two years, borrowers received more than $3 billion in loans from HOLC. By 1937, HOLC owned more than 200,000 homes.

While these policies helped many Americans keep their homes, embedded racism has had lasting effects on BIPOC communities. 

Because borrowers were people who’d already defaulted on loans once, HOLC needed a way to ensure their reliability. In 1935, it launched the “City Survey Program.”. 

In collaboration with the federal government, lenders and real estate agents evaluated neighborhoods and documented their findings into color-coded maps based on perceived creditworthiness. In a dissertation, historian Andrew R. Highsmith explains:

  • Green neighborhoods were the best and mostly housed business people.
  • Blue neighborhoods were seen as good and primarily housed white-collar workers.
  • Yellow neighborhoods were seen as declining, usually due to a shifting of the makeup of the population.
  • Red neighborhoods had what the program called “detrimental influences.” This referred to housing conditions, proximity to environmental hazards and “infiltrations of lower grade population or different racial groups.” This is what we refer to as “redlining” today.

Each neighborhood got an area description that included common professions, conditions of the neighborhood, racial and ethnic makeup, and trends of “infiltration” or ways the area was “shifting” in terms of population makeup. 

Phrases like “racial hazards” and “subversive racial and social elements” were often used to describe communities of color. Even though redlining started in the 1930s, its effects are still pervasive today. The gap between white and Black homeownership is bigger now than it was when race-based discrimination against homebuyers was legal, according to the Urban Institute.

Federal Housing Administration

One year after HOLC launched, the Federal Housing Administration (FHA) was created. 

Through private lenders, the FHA helped make affordable, long-term mortgage loans available for home construction and sale. If a borrower defaulted on their loan, the FHA would pay the bank, relieving the lender of any loan risks. Between 1934 and 1962, the  FHA and the later-formed Veterans Administration backed more than $120 billion worth of loans.

This was a great way for people to get into homes — but it didn’t work for everyone. 

The FHA included “racial provisions” in its underwriting manual to “protect” neighborhoods from the “infiltration” of business and industrial uses, lower-class occupancy and “inharmonious racial groups.”For almost 30 years, 98% of FHA loans were handed to white borrowers. 

Blockbusting and white flight

Alongside the lack of access to home loans through the government, BIPOC homebuyers were discriminated against in the private sector.

In a practice called blockbusting, real estate agents convinced white homeowners to sell their homes for well below their value, warning that Black families were moving into the neighborhood. They’d turn around and sell those properties to Black families for a higher price.

Often all an agent or property developer needed to do to instill fear in white homeowners was hire a Black woman to push a stroller around the neighborhood — the mere idea that Black families were living in the neighborhood pushed white homeowners to sell at decreased property values.

The practice, along with laws and Supreme Court rulings that outlawed racial segregation in housing, provoked an era of “white flight” in the mid-20th century. White families moved in droves from the cities into almost all white suburbs, creating the de facto segregation we still experience today. 

Racial steering and racially restrictive covenants

Another tactic that furthered this divide was racial steering. Real estate agents guided prospective homebuyers toward or away from neighborhoods based on their race. 

This kept neighborhoods — and accompanying resources — segregated. 

Before legal segregation practices were dismantled, many homes in white neighborhoods  included racially restrictive covenants in their deeds. These clauses prevented homeowners from selling homes to Black buyers.

After the riots following the assassination of Martin Luther King, Jr., the Congress passed the FAIR Housing Act of 1968 and outlawed racial discrimination in housing. But studies show steering still happens today, based on ostensibly legally protected classes of people, including race, skin color, gender and disability.

A 2017 study by the Urban Institute found that agents showed fewer available rental units to trans people and men in same-sex relationships than to straight men and cis people. (Women in same-sex relationships were treated the same as straight women.

Impact on the LGBTQ community

To this day, only 22 states and Washington, D.C., explicitly prohibit housing discrimination based on sexual orientation and gender identity, 21 states and D.C. prohibit discrimination in public accommodations, and 15 states protect against credit discrimination. 

While those who fight for LGBTQ rights are hopeful that the Supreme Court’s June 2020 decision in Bostock v. Clayton County sets the precedent to ban legal discrimination in housing as it did in employment, we can see from history that simply making discrimination illegal isn’t enough to stop it entirely — or turn around its detrimental economic effects.

As Audre Lorde once said, “There is no such thing as a single-issue struggle because we do not live single-issue lives.” It’s important that we all understand the systems that affect the queer/trans BIPOC community and how these systems impact the ability to build wealth over generations.

We must work together to ensure our collective freedom, which starts with understanding how we got to the place we’re in now.

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