Fair: Neobank for Immigrants Raises Millions in Funding

Fair Launches as a Multilingual Digital Bank with $20 Million Funding

Fair, a novel digital bank and financial services platform, has commenced public operations following a successful $20 million fundraising round completed within 40 days earlier this year.

The capital was largely secured through the efforts of founder Khalid Parekh, and notably, the majority of investors represent the very demographic Fair intends to serve.

Investment Driven by Community

“Our investment base consists of ninety percent minorities and immigrants, individuals like myself who genuinely believed in Fair’s core concept,” Parekh stated in an interview with TechCrunch.

He emphasized the absence of traditional venture capital or banking institution involvement in this funding round.

Houston: A Fitting Location

The choice of Houston, Texas, as Fair’s headquarters is particularly relevant, given that the city was identified as the most ethnically diverse in the United States during the last census.

A Founder's Personal Journey

Parekh’s background diverges from the typical fintech entrepreneur. While lacking direct experience in banking or financial services, he possesses a proven track record of success as the founder of AMSYS Group, currently valued at approximately $350 million.

His motivation for establishing Fair stems from personal experience; arriving in the U.S. from India 22 years ago with limited funds, he encountered significant obstacles in securing both loans and a basic bank account.

“As an engineer, I found the American banking system confusing, and there was a distinct lack of support for newcomers unfamiliar with its complexities,” Parekh recalled.

Addressing Financial Inclusion

In 2020, Parekh utilized personal funds to develop the technology underpinning Fair, designed to provide financial access to those new to the country, individuals without established credit histories, or those seeking interest-free loan options.

Fair collaborates with Coastal Community Bank, which serves as its sponsoring bank.

Parekh’s vision for Fair is to deliver “ethical, transparent banking” to all, achieved through a membership model that eliminates conventional banking fees.

Members gain access to Fair’s comprehensive online banking and financial services by paying a one-time membership fee of $99, offered with flexible installment options.

Expanding Access to Essential Services

Parekh identified a critical gap in services available to immigrants and low-income individuals, specifically regarding insurance and retirement planning.

“Existing institutions primarily cater to affluent clients, but we aim to build an inclusive institution that treats everyone equitably, irrespective of their background or financial standing,” he explained.

A Competitive Landscape

The financial sector has witnessed a recent proliferation of neobanks targeting specific demographics, including Greenwood, First Boulevard, and Cheese.

Welcome Technologies also focuses on serving the immigrant community.

Fair’s Differentiating Factors

Fair intends to distinguish itself by offering interest-free lending options, alongside investment opportunities, insurance access, and retirement planning tools, all within a single platform.

The platform is currently available in English, Arabic, and Spanish, with plans for further language expansion.

Ultimately, Parekh’s objective with Fair is to contribute to addressing the “longstanding racial income inequalities and widening wealth disparities” prevalent in the U.S.

He has committed to foregoing a salary in his role as CEO.

Key Features of the Fair Platform

Fair’s features include commission-free international money transfers, early access to earned wages, “instant, interest-free” microloans for point-of-sale purchases, an annual dividend account, debit cards for children, and interest-free loans for major purchases like homes, vehicles, and business ventures.

These equity-based loans are structured to comply with both Sharia law and Jewish law, prohibiting the charging of interest.

For home purchases, members can contribute a 20% down payment, with Fair providing the remaining 80% through a jointly owned LLC.

“Members retain the flexibility to buy out Fair’s shares on a schedule of their choosing,” Parekh clarified.

Partnerships and Social Responsibility

In collaboration with Avibra, Fair provides complimentary supplemental life, accident, and AD&D insurance to all members as an integral part of its banking services.

Fair is committed to socially responsible investing (SRI), minimizing exposure to companies with negative social impacts.

The fintech also employs ESG investing principles, evaluating investments based on environmental, social, and corporate governance factors.

Furthermore, Fair is partnering with the United Nations High Commissioner for Refugees and World Relief, pledging to donate 2.5% of its profits to global refugee missions and racial economic empowerment initiatives.

Advisory Board

Fair’s advisory board includes Manolo Sánchez, a director at Fannie Mae and Stewart Information Systems, and former chair & CEO of BBVA Compass, and Samuel Golden, managing director at Alvarez & Marsal and founder of A&M’s Financial Industry practice.