LGBTQ neobank wants to help its members navigate family planning

The challenger bank Daylight is using a fresh round of funding to develop family-planning services for its LGBTQ+ audience.

Last week, the New York City-based company announced that it had raised $15 million in new financing led by Anthemis Group, with participation from CMFG Ventures, Kapor Capital, Citi Ventures, Gaingels and more. At the same time, it unveiled Daylight Grow, a subscription service set to launch in early 2023. The subscription price is not yet available. 

Daylight Grow will help users contend with the logistical, legal and financial barriers of starting a family, says the company. Subscribers will get a personalized family creation plan tailored to their state and needs and access to concierges that provide financial advice and logistical support through text, chat and video. They will also obtain access to a database of vetted family attorney networks and IVF and surrogacy clinics, online support groups and family-building loans. The company also says it will offer hundreds of free subscriptions to low-income families in states where LGBTQ+ rights are severely threatened.

"Family creation is a major life event for queer people and the challenges we face are increasingly more complex than those for non-LGBTQ people," said Billie Simmons, cofounder and chief operating officer of Daylight, in a press release.

Daylight Grow also signifies a way neobanks can monetize beyond interchange revenue: by offering a package of services curated to its specific market.

"I think most neobanks aren't this far along in their strategic thinking," said Alex Johnson, author of the Fintech Takes newsletter. "The niche neobanks are, by necessity, already having to figure out a plan for moving forward that doesn't depend on interchange revenue."

Daylight's banking features include a deposit account and debit card, cash-back rewards for spending at queer and allied partner businesses, automated savings, paid financial coaching and the ability to use one's chosen name, which will be used at all times except the know-your-customer process. Its underlying banking services are provided by Pathward Financial, formerly MetaBank, which is based in Sioux Falls, South Dakota, and has $6.7 billion of assets.

Banks and credit unions have been making more effort in recent years to support their LGBTQ customers. The proposed Diverge Federal Credit Union will serve historically marginalized and unbanked communities, starting with LGBTQ members and formerly incarcerated individuals. Its products will likely include loans for same-sex couples to adopt and loans for gender-affirmation surgeries. Some banks and credit unions have been making strides, such as by letting customers use their chosen names on their payment cards — although even here, there are gaps that traditional financial institutions largely haven't filled, such as extending the use of these chosen names across all service touchpoints. 

"Software focused on solving money-adjacent problems is the biggest competitive threat facing traditional banks today precisely because it's not about taking market share away," Johnson said. "It's about creating new markets, based on problems that customers have always wanted a better solution for, but have never had."