Daylight, the First LGBTQIA+ Bank Will Close This Month. Here's What Customers Can Do

At the end of 2020, Daylight launched the first LGBTQIA+ banking platform in the U.S. It promised to break down some of the financial barriers faced by the community and give its members "the financial tools and products they need to live their best lives." 

Sadly, while the business achieved a lot, it will close its doors on June 30. It says all customer funds are safe and will be fully accessible for transfer until then.

What to do if you're a Daylight customer

If you're a Daylight customer, don't panic. Your money is safe. Billie Simmons, co-founder and COO of Daylight told us by email, "We are working with each of our members individually to transfer the money from their Daylight balances before the end of June." Watch out for communications from Daylight with more information. 

If you're not able to transfer your funds, Daylight will send a check for the balance in the mail. Simmons also stressed that all customer funds are covered by FDIC insurance. You may need to open a bank account with another company, but you shouldn't lose a cent.

What happened at Daylight?

CEO and co-founder Rob Curtis wrote that the current high interest rate environment had made it difficult to implement the company's mission. "Daylight had a great run paving the way for U.S. LGBTQ+ customers -- we opened thousands of trans-inclusive debit accounts, supported thousands of prospective LGBTQ+ parents' plans for their families," he said in a blog post. "Ultimately, though, we couldn't provide these services in a way that covered our costs -- this is likely a job for big banks and I hope they pick up the torch and carry forward our legacy."

Daylight has also been hit by allegations in the press of inappropriate behavior and mismanagement. An article in New York Magazine said three former employees had filed a lawsuit against Daylight accusing the company of age and wage discrimination, whistleblower retaliation, and fraud.

Putting those accusations to one side, this has been a challenging year for many financial institutions. The high-profile collapse of several mid-sized banks spooked customers and a lot of people moved their money to the perceived safety of bigger banks. This squeezed the deposit base of many smaller players, making it difficult to operate.

How to find LGBTQIA+ friendly banks

One of the reasons Daylight was founded was that traditional banks haven't always been great at meeting the needs of LGBTQIA+ customers, to put it mildly. Indeed, a recent LGBTQI+ Economic and Financial (LEAF) survey found that more than 1 in 10 respondents said they'd experienced discrimination when using financial services. Things have started to change, but there is still a long way to go.

If you banked with Daylight and are wondering where to move your money, search for banks that actively support the community and have specific policies in place to prevent discrimination. It's worth noting that a couple of big banks support true name initiatives, including BMO Harris and Citibank. 

If you're looking for a smaller bank, check out Amalgamated Bank, which says it is committed to environmental and social responsibility. It has supported several initiatives to champion LGBTQIA+ rights, and its employee handbook covers policy and support for gender transitioning individuals.

Don't rule out credit unions. Element FCU offers savings and checking accounts, as well as other financial services such as loans and credit cards. Under the slogan, #ThePlaceYouBelong, it encourages people to use their chosen name and pronouns. "If coming out was easier than dealing with your bank, it's time to make the switch to Element," says its website.

Bottom line

Over a quarter of respondents to the LEAF survey did not have a checking or savings account -- a statistic that shows how important Daylight's services were for the LGBTQIA+ community. But don't let Daylight's issues stop you from finding an LGBTQIA+-friendly bank that serves your needs. 

Some banks not only include inclusive policies in their mission and vision statements, but also back those words with actions. Combine that with low (or no) fees and services that will make your life easier, and you might be able to find a good replacement for Daylight.