As Pride Month draws to a close, we wanted to take a look at the impact that banks and other financial services companies have on LGBTQ+ communities.
The issues that face LGBTQ+ communities when it comes to financial services are as varied as these communities themselves are. They range from simply allowing cardholders to determine how they will be identified on their own bank cards, to healthcare-related savings and investment planning, to learning which financial institutions respect LGBTQ+ individuals and their values – as well as those institutions who work against them.
We caught up with Chris Luton, Director of Customer Care with Oakland, California-based Beneficial State Bank, to talk about the relationship between banks – especially community banks – and LGBTQ+ communities. We also discuss Beneficial State Bank’s efforts in this regard – as a “values-based bank” – as well as the bank’s own development as a community financial institution in the age of digitization.
Tell us about Beneficial State Bank. What makes you unique in your community?
Chris Luton: Beneficial State Bank is a for-profit, mission-driven bank whose owners are institutions governed in the public interest. Instead of working to maximize shareholder profits, we work to maximize prosperity for our communities and our clients, while maintaining strong business performance and serving as a model for ethical banking.
The bank was founded to serve a triple bottom line of environmental sustainability, social equity, and prosperity. The intention was to prove that this banking model could be sustainable, and influence the banking system to substantially change its practices.
All of these qualities differentiate us from most banks. For instance, we invest in and work with community organizations that are often turned away by traditional banks. We offer socially-conscious individuals, small businesses, and nonprofits the unique opportunity to put their money toward causes they believe in.
What does it mean to be a values-based bank?
Luton: This means prioritizing our values just as much as our profits, which is captured in our triple bottom line of environmental sustainability, social equity, and prosperity.
In practice, this means that our values guide our investment decisions. All of Beneficial State Bank’s investments are mission-aligned, and we aim for at least 75% of that lending to go toward the highest-impact organizations and initiatives. We then work to ensure that the rest never goes toward projects or organizations that cause harm.
For example, we invest in environmental sustainability, affordable housing, social justice, and health and well-being. Meanwhile, we never invest in fossil fuels, payday lenders, private prisons, or weapons manufacturers.
What can banks do to better serve and support the LGBTQ+ community?
Luton: Right now, some of the nation’s biggest banks fund anti-LGBTQIA+ policies through political donations. If the millions put toward these discriminatory policies were instead invested in organizations that protect and uplift the LGBTQIA+ community, banks could make huge progress in a more positive direction. For better or worse, money is hugely influential, especially in our political process. Banks could better serve the LGBTQIA+ community by leveraging this power for good.
Banks should also consider how their policies and practices impact their LGBTQIA+ customers and employees. At Beneficial State Bank, we strive to create a welcoming and inclusive customer experience — for example, we make it as easy as we can for clients to change their name and gender on any official communications.
Ultimately, it’s important that banks try to see the big picture on this issue by looking beyond performative celebrations during Pride Month. Members and allies of the LGBTQIA+ community are looking for more than just a rainbow logo or special blog post, and the community’s needs don’t suddenly end once Pride month is over. Support for the LGBTQIA+ community should last all year long. Companies should also look at their overall impact to see if it’s consistent with their messaging. For instance, they might claim to support the LGBTQIA+ community while funding discriminatory politicians or having discriminatory internal policies.
What changes do banks need to make internally to better support their LGBTQ+ employees?
Luton: It starts with building a welcoming and inclusive environment where employees feel safe and empowered to be themselves. We make an effort to hold space for connection among our LGBTQIA+ employees and their allies, and host Pride celebrations every year. Benefits and policies should also be inclusive. For instance, we make sure employees can add domestic partners and their children to their insurance plans, regardless of marital status.
How can banks help consumers make better banking choices that are aligned with their values?
Luton: The first step is transparency. Consumers can’t make better banking choices if they don’t know where their money is going. Unfortunately, a lot of banks aren’t transparent about where their money goes. Banks need to be honest about their investments so consumers can learn, engage, and make banking choices that are more aligned with their values.
Values-based institutions like Beneficial State Bank are upfront about our investments. For example, our goal is always for at least 75% of our commercial loan dollars to go to mission-aligned businesses – i.e., those working on issues like affordable housing or renewable energy. We also never lend in non-mission-aligned sectors, such as fossil fuel extraction, private prisons, or weapons manufacturing.
Mighty Deposits is a great resource for discovering how your bank is using your money, and what better options might be out there. Beyond the banking sector, Data for Progress has also released the latest version of its Pride Corporate Accountability Project, which looks at how many Pride sponsors and Fortune 500 companies are funding anti-LGBTQ+ campaigns.
Digital transformation is a big topic in banking. How has this trend impacted Beneficial State Bank?
Luton: A big milestone in our own digital transformation was the PPP lending process in 2020. We did a substantial amount of lending that required all hands on deck. This actually gave us confidence in bringing up a new platform quickly and effectively. Since then, we’ve improved our digital and online functions, increased efficiency and speed, and lowered our cost of delivery.
The bank also recently closed on an equity investment of $218 million from the U.S. Treasury’s Emergency Capital Investment Program (ECIP), which will support expanded lending to small businesses, and low- and moderate-income consumers. Our first priority is investing in the bank’s capacity so we can better serve our customers. This will include technological capacities like automation and infrastructure.
Where do you hope to see Beneficial State Bank in the next three to five years?
Luton: With this recent investment from the U.S. Treasury, we see the next few years as a time of growth and an opportunity to demonstrate the power of values-based banking. We see ourselves continuing our work with marginalized customers and communities on a larger scale, expanding our investments in people and organizations making positive change in the world, and influencing other banks to do the same.
Our ultimate vision is an economy that restores our planet and extends prosperity to all people. We can achieve this vision if more banks decide that doing good and doing well are not mutually exclusive.