Neobanks are all the rage in the modern banking world, but so far these digital challengers have only been launched by fintech entrepreneurs and a handful banks.
But there’s a new player, USALLIANCE Financial — a federal credit union based in Rye, N.Y. — which, along with three other large credit unions, introduced its own take on a neobank: Bank Dora Financial, intended to appeal to under- and unbanked consumers nationwide.
Yes, that’s correct, a credit union neobank with “bank” in its name. More on that below.
Bank Dora’s leaders call it a “neobank strategy in the credit union movement,” but it could also be referred to as a neo-credit union. People can open a fee-free checking account completely online with a debit card and get access to a network of 30,000 surcharge-free ATMs.
A few of Bank Dora’s primary features include two-day early payday direct deposit and two-factor authentication using fingerprint and face ID technology.
Bank Dora meets the requirements for the Bank-On national accounts certification. This covers things such as overdraft fees, low costs and “robust transaction capabilities” — such as a debit or prepaid card and online bill pay.
Bank Dora launched in late September 2021 and had amassed more than 1,000 installs on Google Play after about two weeks. (Apple’s App Store does not provide similar data publicly.) The all-digital neobank is a partnership between USALLIANCE ($2 billion in assets) and three other credit unions: Digital Federal Credit Union ($9.8 billion), Service Credit Union ($5 billion) and Affinity Plus Federal Credit Union ($3.5 billion).
To learn more about the neo-credit union and what it can bring to the table, The Financial Brand spoke with the CEO of USALLIANCE Kris Vanbeek and its Senior Vice President and Chief Information Officer Kevin Randall.
Read More: Why Are So Many Credit Unions Now Buying Banks?
Will ‘Bank’ in the Name Stick?
The choice of the name Bank Dora Financial, especially the “bank” part of it, may strike some as ironic, considering that credit unions mostly tend to differentiate themselves from banks. In fact, some bankers’ reaction to the name might be a bit stronger, considering the long-running tension between the two types of financial institutions.
At the least, financial institutions of any description may wonder whether the word “bank” in Bank Dora Financial will be problematic, given the legal situation Chime ran into in late in the spring of 2021. Chime had been referring to itself as a bank in its marketing, but then the California Department of Financial Protection and Innovation insisted — because the neobank didn’t have a bank charter or FDIC insurance — that Chime stop using the term entirely.
Asked if Bank Dora Financial may run into a similar issue, Digital Marketing Manager Alaina Froton responded that she and her team are “saying that ‘Bank’ is a verb in our situation.”
Keep An Eye Out:
The word ‘bank’ in Bank Dora is intended to be a verb, not a noun, according to a spokesperson.
The concept of multiple financial institutions backing an all-digital brand is also unusual in banking. Vanbeek and Randall both comment that the industry will never see banks team up on a similar venture.
What Got Dora Started
Dora really got started when Vanbeek watched fintechs pop up years ago with the casual atmosphere they encouraged, as CEOs brought dogs in their offices and posted about it on social media. As time went on, he and Randall saw the success of these organizations, and they began brainstorming their own project and toyed with the idea of calling it “Benjamin.” “It had a slightly different flair to it,” says Vanbeek.
But that changed when the team pitched the name “Dora,” which pays homage to Dora Maxwell, a pioneer of the credit union movement in the 20th century.
“Her idea of planting hundreds of credit unions throughout New York and Connecticut and Massachusetts made sense,” Vanbeek explains, adding USALLIANCE doesn’t have the capacity to put branches everywhere. With Bank Dora Financial, however, he says they “can offer a really great product nationally that resonates with different populations.”
The different populations Vanbeek is referring to are underbanked and unbanked communities that don’t have the same point of access to banking services as affluent consumers. The Hispanic market is a particular segment they are targeting.
Breaking Away From The Tide
The intention of the company is to have Bank Dora Financial “stand on its own,” Vanbeek says, complete with its own branding — like most neobanks in the industry.
There are swarms of neobanks flooding the banking market, many of which argue they are better equipped than the legacy providers to provide banking products.
Dora’s team thinks it has plenty to distinguish itself from the crowd. One key feature is full bilingual integration.
Randall, who is spearheading the rollout of Dora, says there are three primary reasons Spanish-speaking customers don’t want bank accounts: they don’t have enough money for the account, the fees are too high and there is overall just a lack of trust in banks and credit unions.
The infrastructure of a credit union, he argues, is already naturally set up to address the first two problems for consumers. However, the third one is tougher and not tackled by financial institutions enough.
Most providers fail at this as early as the onboarding process, Randall suggests, adding that “presenting a disclosure to them in a language they’re not comfortable with doesn’t breed much trust.”
Getting the Spanish language integration working properly is key to building trust with the large Hispanic market. Building Spanish into Dora means designing a system that incorporates the language in the digital advertising and the website, the onboarding and the disclosures, the app itself, the voice-response system and the subsequent email or text messages.
“To have that all linked seamlessly hasn’t really been done in a way that meets consumer expectations,” says Randall. “I think it’s something that is really important.”
Language Matters in Banking:
Banks and credit unions can benefit from building in Spanish-speaking integrations for customers who struggle with English-orientated banking websites and apps.
Having a full slate of financial services will also set Dora apart, Vanbeek states.
“If you look at all the traditional neobanks out there today, they typically only have one channel, one core product and they’re trying to go into other things,” he notes. Having a multi-institution team to draw on gives Dora another leg up over the neobanks, Vanbeek believes.
Read More: 7 Trends Credit Unions Must Jump On
A Pack of Institutions On the Board
While four different institutions are investing in Dora (currently), the accounts through Dora will be serviced primarily by USALLIANCE. Long term, Vanbeek says that the team would be happy to welcome smaller credit unions into the mix.
“We literally spoke to dozens of other credit unions that have a lot of interest in this,” Vanbeek says. “I have no doubt they’re going to be a part of it. ”
For now, it would be difficult to have too many voices in the mix.
“We have four very like-minded credit unions and we can manage that,” he explains. “If it were 20 credit unions, we might be in board meetings for weeks without being able to make a decision.”
Lastly, the executives at Dora insist that financial wellness will also be at the core of their banking practices. But not how it is done traditionally.
“Let’s integrate it right at the transaction level and offer that guidance in real time,” says Randall. The goal of Dora is to connect with consumers other than just at the end of the month, he adds.