Dive Brief:
- Four regional credit unions are cooperating to launch a neobank that caters to low-to-moderate-income (LMI) customers and aims to reduce racial and economic disparities in the financial services sector, according to a Tuesday press release.
- "The credit union movement is really made for offering products at scale that are safe and affordable for [LMI users]," said Kristi Kenworthy, the managing director of Bank Dora Financial, the challenger bank founded by Minnesota-based Affinity Plus Federal Credit Union, Massachusetts-based Digital Federal Credit Union, New Hampshire-based Service Credit Union and USALLIANCE Financial of Rye, New York.
- The launch comes as the number of monthly active neobank users has doubled between June 2019 and June 2021, The Economist found, citing data from Apptopia.
Dive Insight:
Dora — named for 20th-century advocate Dora Maxwell, who helped hundreds of credit unions across the country secure charters — is believed to be the credit union space’s first foray into neobanking.
Its Everyday Checking account doesn't have a minimum balance requirement, and doesn't charge monthly maintenance fees, according to the press release. Dora's app functions in both English and Spanish, and the platform offers early paycheck access for users who have signed up for direct deposit.
"We want to change how people think about access to affordable and fair financial services," said Kenworthy, who, before becoming managing director of Dora, served as an assistant vice president at USALLIANCE Financial, one of Dora's founding credit unions. "Fifty million Americans are not participating in mainstream banking services because of barriers to opening, distrust 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 was made public at last week's Inclusiv Virtual 2021 Conference. The platform, which is BankOn-certified, seeks more credit union partners.
The credit unions' move comes as COVID-19-related lockdowns pushed a number of people to open digital bank accounts for the first time.
"Supporting the communities we serve, improving financial well-being and creating enduring relationships is at the heart of what we do," David Araujo, CEO of Service Credit Union, said in Tuesday's press release. "We understand that financial service isn't one-size fits-all. We are excited, through Dora, that we will be able to extend our impact in order to provide a trusted financial partner for people in our community who need it the most."
