4 credit unions launch a neobank for LMI users
- Four regional credit unions are working together to launch a neobank that caters to low-to-moderate income (LMI) clients and aims to reduce racial and economic disparities in the financial services industry, according to a press release Tuesday.
- “The credit union movement is really about making products on a large scale that are safe and affordable for [LMI users]”said Kristi Kenworthy, Managing Director of Bank Dora Financial, the challenger bank founded by Minnesota. Affinity Plus Federal Credit Union, Digital Federal Credit Union of Massachusetts, Service Credit Union of New Hampshire, and USALLIANCE Rye Financial, New York.
- The launch comes as the number of monthly active users of the neobank doubled between June 2019 and June 2021, The Economist found it, citing data from Apptopia.
Dora – named after 20th century lawyer Dora Maxwell, who has helped hundreds of credit unions across the country obtain charters – would be the first foray into the neobanking space of credit unions.
His The checking account has no minimum balance requirement and does not charge a monthly maintenance fee, according to the press release. Dora’s app works in both English and Spanish, and the platform offers early access to paychecks for users who have signed up for direct deposit.
“We want to change the way people think about accessing affordable and equitable financial services,” said Kenworthy, who, before becoming Managing Director of Dora, was Deputy Vice President of USALLIANCE Financial, one of the founding credit unions of Dora. “Fifty million Americans do not participate in traditional banking services due to barriers to openness, mistrust of the banking system, gaps in awareness, past history or lack of access, including the lack of a fully bilingual digital banking experience. “
Dora’s launch has been made public last week Inclusive Virtual conference 2021. The platform, which is BankOn certified, is looking for more partners from credit unions.
Credit unions move as lockdowns over COVID-19 growed a number of people to open digital bank accounts for the first time.
“Supporting the communities we serve, improving financial well-being and building lasting relationships are at the heart of what we do,” said David Araujo, CEO of Service Credit Union, in Tuesday’s press release. “We understand that financial services are not universal. We are excited that Dora is able to expand our impact to provide a trusted financial partner to those in our community who need it most. “