How forward-thinking banks connect with LGBT consumers
Consider these three examples of how the financial services industry has reached out to a now celebrated (yet once isolated) demographic with intentionality all but inconceivable a generation or two ago:
- In a recent advertisement for TD Bank’s mortgage lending, a same-sex male couple plays peek-a-boo with their baby while the narrative below the photo describes the bank’s easy mortgage payment plans.
- A debit card issued in June by U.S. Bank displays sparklers shot into the sky amid rainbow colors. The card was introduced at Pride parades throughout the nation.
- And also at U.S. Bank, Ann Dyste has a title that didn’t exist anywhere in banking not all that long ago: LGBT (standing for lesbian, gay, bisexual and transgender) strategy manager. Since taking on the role in October 2016, Dyste has created a company first: an LGBT banking site. It features articles that address topics from same-sex wedding planning to how modern families “break the stereotypical mold.”
Taken together, these developments illustrate how banks are eager and willing to engage the LGBT community—a group that wields significant financial power. And with court rulings that allow same-sex marriage—thus opening the door for more couples to start families—a broader array of financial services has emerged to meet growing needs.
That means beyond the typical checking accounts, car loans and investment accounts, banks now emphasize joint mortgages and even college loans for couples’ children.
“The advice we are giving to this community is different than it was two years ago. We’re seeing more same-sex couples get married and having kids. That means they have to plan their finances differently and we have to be sensitive and understand their unique needs,” Dyste says.
The LGBT community is sizeable. San Francisco-based Community Marketing Insights estimates it represents between five and six percent of the American population. U.S. Bank executives estimate it brandishes a buying power of more than $800 billion a year.
“This represents a relatively large potential to banks looking for growth,” says Dave Paisley, senior research director at Community Marketing & Insights, which researches the LGBT community’s market needs.
But banks can’t passively wait for new accounts to roll in. “The LGBT community tends to gravitate to those companies that aggressively market to them,” Paisley says.
In recent years, most banks have made some efforts to pursue this market, if nothing more than sponsor booths and floats at Pride parades.
TD Bank, for example, sponsors more than 30 Pride events annually and its #ForeverProud float appears at parades throughout the East Coast. The bank gives away more than a quarter-million pride-themed items each year.
“#ForeverProud exemplifies our support of the LGBT community not just during pride parades but throughout the year’” says Lisa Gruner, TD Bank senior vice president of community marketing. “We encourage everyone to celebrate their individuality every day.”
To that end, Gruner notes, “We strive to incorporate representation of the LGBT community in our advertising, promotions and collateral materials, and we recently featured a Lesbian couple in a debit card television spot.”
But a progressive ad does not a loyal customer base make. “Nearly all the banks now are reaching out, so it will take something different for a bank to really stand out,” Paisley says.
U.S. Bank thinks it is doing that with its new debit card. While it doesn’t offer any unique rewards or features, the card dedicates its look—a rainbow of smoke dancing off a sparkler—to the LGBT community, its families and supporters. Launched May 28, the card was prominently displayed at 33 Pride festivals with the tag line “Wear your pride on your card.”
U.S. Bank is not saying how many cards it has issued but as Dyste notes, “We’re seeing a lot of new customers opening accounts to get the card, although the majority of our cardholders are existing customers.”
U.S. Bank is also promoting the card on social media. Stories of individual customers, such as an artist in Atlanta struggling financially, have accompanied the card promotion. Marketing materials that feature same-sex couples are becoming more common—in the mainstream media as well LGBT publications.
But while personal stories and targeted graphics are good, banks should avoid stereotypes, Paisley says.
“It’s a mistake to view the LGBT community as one cohesive unit,” Paisley points out. “You have 65-year-old retired lesbians moving to Phoenix and 22-year-old males in Manhattan as well as same-sex couples moving to the suburbs. You have to look at segments based on age, location, relationship status.”
Also, avoid any hint of insult or condescension. “Just like any other segment marketing, ads have to be sensitive to the concerns of the population,” he says. “You can’t step over the line and patronize,” he says.
Dyste agrees. “It comes down to the message we send: Are we being authentic? We need to understand their financial goals and individual nuances just as we would with any customer of our bank.”
One false stereotype is that members of this community are automatically wealthier and have more disposable income because they don’t have families to support. “They struggle with the same financial issues as everyone else. And they need help planning for retirement and buying a home,” Dyste says.
Thus banks may want to gather input from employees and customers as to which direction to take. U.S. Bank has Spectrum groups in eight communities where customers and employees suggest ways that branches can engage with the LGBT community. “They help us execute programs, drive activation levels and encourage community engagement,” Dyste says.
TD Bank works with Pride organizations as well as LGBT chambers of commerce and the bank’s employee Business Resource Groups to develop financial services targeted to the LGBT community, including small businesses owners. The bank promotes the fact that for eight years running, the Human Rights Campaign Foundation named it one of the best places to work in terms of LGBT equality.
Still, some banks may fear a conservative backlash to ads that feature same-sex couples. A few years ago, a religious group began a social media campaign against Wells Fargo and threatened that its members take their money out of the bank after the bank featured a lesbian couple in an ad. Wells Fargo did not pull it.
“Most banks will find the gain in new accounts from these ads outweigh any lost accounts due to a backlash” Paisley says. “Besides, with so many banks offering some form of community outreach, where else can people go if they want to boycott a particular bank that features same-sex couples?”
Meanwhile, expect to see more ads where same-sex couples stroll the beach or play with their kids as they contemplate the road ahead. Whatever that future holds, it promises for banks and their LGBT customers something as synergistic as it is symbolic: a rainbow of new financial possibilities.
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Lauri Giesen has spent more than 25 years writing about banking technology and payments for numerous business and financial publications. In the 1990s, she founded and edited Financial Service Online, a magazine covering Internet-based forays into banking and investment services.