Reflections on a Rainbow Flag

A few years ago, my husband and I went to our local bank branch to get a home equity loan for a kitchen remodel. The branch manager and loan officer knew us well and were happy to help, assuring us that the process would be simple. Unfortunately, they didn’t anticipate that the appraiser they hired would see our rainbow pride flag and set our home value so low that the bank had to deny our loan application. That’s when I learned firsthand what researchers had already discovered: same-sex couples are often denied home loans—not because of policy or creditworthiness, but due to unspoken prejudice.

I shared this story at Finovate Spring last month, and some people in the audience were genuinely surprised that such discrimination still happens. After all, the equal rights of the LGBTQ+ community have been affirmed by both courts and legislation in recent decades. It’s 2024—doesn’t everyone know someone who’s LGBTQ+? Isn't everyone equal? Yet, despite greater visibility and increased legal protections for LGBTQ+ Americans, bias, discrimination, and exclusion in the financial services sector still occur all too often.

This week marks the beginning of #LGBTQ+ #PrideMonth. Throughout the month, the LGBTQ+ community and its allies will celebrate the 55th anniversary of the 1969 Stonewall riots in New York City. Rainbow flags will fly in communities large and small—urban, suburban, and rural—and individuals and organizations will find many ways to celebrate progress, promote diversity, and continue the fight for equality.

I'm always happy to see numerous financial institutions and fintechs joining in these celebrations and standing with the LGBTQ+ community, both during Pride Month and throughout the year. But what about smaller community banks and credit unions? Will they participate? Some do, many do not.

In today’s politically charged environment, many smaller institutions prefer to stay silent on issues that might alienate or anger part of their customer base. They may value diversity and equality in principle but fail to express it in practice, missing important opportunities to connect with LGBTQ+ individuals and their allies. Here are a few reminders for those financial institutions and organizations:

1. More American adults than ever identify as LGBTQ+. A recent Gallup study shows that the number of such adults has more than doubled since 2012. Today, more than one in five Gen Z adults (20%) identify as lesbian, gay, bisexual, transgender, or queer.

2. LGBTQ+ individuals face various financial issues. On average, we earn just 90 cents on the dollar compared to the average American. Same-sex couples face higher costs to have children or own a home, and transgender and gender non-binary employees often deal with job and income instability.

3. As customers, we need experiences that recognize our identities and relationships. There was a recent story about a bank call center employee who froze the account of a transgender woman who “sounded like a man” (even though she answered all the security questions correctly, she was still instructed to show ID in person). We need adoption financing, trans-inclusive debit accounts, and support for transitioning expenses.

4. As employees, we also need recognition of our identities and relationships. We need fair hiring, promotions, and benefit policies. We need Employee Resource Groups and the freedom to show up as our authentic selves at work. We need inclusive dress code policies that are no longer based on enforcing gender stereotypes.

5. Both customers and employees need to see the financial sector standing for equality—we need allies to stand up and speak out.

And when you do decide to reach out to the LGBTQ+ community, please remember that you can’t treat the 30-million-plus LGBTQ+ community in America as one monolithic segment. What we need and how we perceive your efforts will be shaped by how our various identities (e.g., gender, race, ethnicity, ability, socioeconomic, etc.) intersect.

It is also good to remember that flying rainbow flags and using rainbow icons in June won’t build meaningful relationships with LGBTQ+ employees or customers. Connecting with the community requires effort throughout the year.

But Pride Month 2024 is a perfect time to take an honest look at where you and your institution stand in relation to the LGBTQ+ community—both your LGBTQ+ employees and your current/potential LGBTQ+ customers. Here’s an easy formula:

1. Assess or reassess where you are.

2. Acknowledge where things need improvement.

3. Adjust where it will have the greatest impact.

The last part means make sure your goals are ultimately about systemic change: achieving pay equity, increasing LGBTQ+ representation, and improving LGBTQ+ employee engagement.

When the FDIC released their plan for diversity, equity, and inclusion a few years ago, they said, “When we help remove obstacles in the banking system that stand in the way of people achieving their very best, we strengthen society as a whole.” Let's remove some obstacles! Let’s make this month about more than celebration; let’s make it about removing the barriers that prevent LGBTQ+ individuals from accessing the financial services, education and resources they need. When we bring greater fairness into financial services, we can change the world.