Transgender Financial Inclusion: some projects by Fintech and Banks

financial inclusion initiatives for transgenders

Absence of credentials, lack of support from banks, paucity of dignified employment opportunities, and rejection by society.

There are several reasons why the transgendered community find it challenging to gain dignified employment almost everywhere, beginning with the social stigma attached to their true identity.

According to Experian, the LGBTQIA+ community faces unique social and financial challenges that can hinder achieving their goals compared with the non-LGBTQIA+ population. And the problem is particularly relevant to the transgender community.

A few years ago, for example, in the quite tolerant UK, Sophia Reis, a transgender woman from Nottingham, said she "felt humiliated" after Santander's telephone banking service froze her account because “she sounded like a man”.

The 46-year-old said a customer service adviser later told her the problem had arisen because of her voice. Santander said it has a "duty to protect the security" of accounts, but apologized for any offense caused.

A never-ending story of discrimination

It’s clear that trangender people face unique hurdles when it comes to finances or accessing certain financial products. As stated by Emma Palethorpe, Co-chair of the LGBTQIA+ network at St. James’s Place, “one problem trans folk often encounter is a need to ‘out’ themselves against their will – by that, I mean to reveal that their sex assigned at birth isn’t the same as how they’re presenting now. For example, when it comes to pension transfers, final-salary schemes often require a calculation based on life expectancy and for that, there is a business need to know sex assigned at birth, which can be uncomfortable to talk about”.

According to data, between 2 million and 6 million people in the United States identify as transgender, and 34% lack identification to match their gender, making it harder for them to access banking products, the company wrote in its press release.

Jonathan Lovitz, the senior vice president of the US-based National LGBT Chamber of Commerce (NGLCC), in an interview with Forbes said “only half of my fellow Millennial LGBTQIA+ workers rate their current financial situation positively, with more than 60% saying their savings wouldn’t last more than three months”.

Most banks’ compliance processes do not accommodate transgendered people. When financial institutions allow people to use their chosen name on cards and accounts, sometimes bank databases don’t update information everywhere, meaning transgender customers see their deadname listed for some transactions. However, in the past years some interesting projects came out to find the gap and boost financial inclusion of LGBTQI+ community.

Bliss, the Banking App suited For Transgender

In 2021 Euphoria, a technology suite for the transgender community that helps alleviate the struggles associated with gender transition, partnered with Jiko, a fintech startup that uses customer deposits to purchase short-term treasury bills, to launch a banking app called Bliss.

As stated by the company, Bliss helps transgender users manage their money. Users don’t need to undergo stringent identity verification steps that can make logins difficult. One such scenario could occur when users have ID cards and papers that don’t match their preferred pronouns. Bliss is able to open accounts for those whose visual representation does not match their government documentation.

In more detail, the move aligns with Jiko’s intended pivot away from consumer services and toward B2B offerings. The company charges partners a flat monthly fee for each account. Each account holds customer funds in government-backed treasury bills, allowing its account holders to spend these funds in real time through debit transactions.

Jiko operates a unique deposit model. It begins with owning a bank and a brokerage and integrating a full technology stack with both to power operations. Rather than storing money in a bank account, customers' funds are automatically invested in government-backed Treasury Bills. When those funds need to be accessed, they can be liquidated in real-time. As a result, customers can feel secure knowing their funds are never lent out, always available, and potentially earning.

A “Rainbow Savings Account” For Indian Transgenders

India and Pakistan are also supporting transgender community financial inclusion ​​​In September 2022, Kerala-based ESAF Small Finance Bank launched “Rainbow Savings Account”, a new product suited exclusively for the transgender community. As stated by the bank, the “Rainbow Savings Account” program offers a high-interest rate and advanced debit card features. Another appealing element of the plan is the default credit of interest to the account.

Despite the Reserve Bank of India mandated that banks include a separate column on all of their applications and forms called “third gender” in 2015, it is still difficult for most transgenders to open a bank account because of their semi-literacy, ignorance of processes or lack of documents. That’s why the “Rainbow Savings Account” was warmly welcomed by the Indian trans community with the aim to promote a trans-friendly or inclusive labor tradition.

The Pakistani Income Support Programme

Something is moving in Pakistan too. In January 2023, Federal Minister for Poverty Alleviation and Social Safety Shazia Marri said that transgender community was being formally included in the Benazir Income Support Programme (BISP). Shazia Marri stated that transgendered people are eligible for Rs. 7000 quarterly cash assistance. “Transgendered people belong to a poor segment of society.

They are facing economic and societal challenges in the country, and they are ignored in the society and moreover, they are separated from their families. Transgender avoid coming forward before the data managers due to society’s behaviour towards them”, said Shazia Marri .

Pride Bank is tapping into Brazil's underbanked gay community

Flying to Brazil, we have a neobank that wishes to tap into this often overlooked and neglected market. Combating prejudice, educating the public, and supporting vital social issues that matter to the LGBTQIA+ community: Pride Bank.

We cover Pride Bank story in another article, but it is worth noting that the neobank offers customers a rainbow-design debit card marked with their chosen name — not the one on their birth certificate, but the one they identify with. This is a huge advantage as most.

Mastercard True Name

True Name is a card by Mastercard that allows cardholders to mark the card with their chosen name. Launched on the US Market in 2019, True Name then landed in Europe, in the Middle East and in South America. Amongst the banks offering a "True Name" option, we find Citi, BMO Harris Bank, Bank Republic and the digital bank bunq.