Lately, there has been quite a bit of discussion about challenger banks, with many wishing that a credit union should step into this game.
Wish no more! Let me introduce you to Dora, a neo credit union. Neobanks are sometimes referred to as "challenger banks."
A challenger bank is typically a smaller bank that aims to compete with traditional banks by leveraging technology. Most challenger banks are digital or app-based and do not have a physical branch system. This structure provides a considerable benefit to the challenger bank because it can avoid the high costs of running in-person branches and use the money saved to deliver better digital service and product innovation, resulting in lower costs to consumers. The apparent target of challengers is those who embrace technology, primarily millennials and Gen Zers.
For a while, the majority of challenger financial institutions were banks. However, in the beginning in the fall of 2021, the credit union industry's first neo credit union launched, Bank Dora Financial (Dora). The name was inspired by credit union pioneer Dora Maxwell, who helped charter hundreds of U.S. credit unions and believed everyone should have access to fair deposit products. Dora serves the 50 million Americans currently not participating in mainstream banking. Dedicated to financial inclusion, Dora's everyday checking account features no minimum balance, no monthly maintenance fees, early payday with direct deposit, bill pay, and a surcharge=fee network of 30,000+ ATMs, financial education. It includes a fully bilingual digital banking experience.
"We want to change how people think about access to affordable and fair financial services," said Managing Director Kristi Kenworthy. "Fifty million Americans are not participating in mainstream banking services because of barriers to opening, distrust of the banking system, gaps in awareness, history, or lack of access – including the lack of a fully bilingual digital banking experience."
The proverbial cooperative "hug" to Dora is that four credit unions founded it. They are Affinity Plus Federal Credit Union ($3.5B in assets) headquartered in St. Paul, Minn.; Digital Federal Credit Union ($9.8B in assets) in Marlborough, Mass.; Service Credit Union ($5B in assets) in Portsmouth, N.H.; and USALLIANCE ($2B in assets) in Rye, N.Y.
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