It’s 2019, not 1852

Banking and money have come a long way. Traditional banks have not.

Today we are launching Step, a next generation banking solution for teens and families.

My journey

Traditional banks have had several unfortunate occurrences over the past decade. This coupled with the rise of modern banking options has created more opportunity for consumers to start questioning and looking for alternative solutions.

Wells Fargo has a rich history with more than 150 years of experience. It started transporting money by steam, horse or train and offering a secure and convenient solution to manage your money. For a brand still in business today with so much experience, one would expect trust and stability. In fact, Wells Fargo launched a National campaign last year “Re-establishing” itself after 166 years.

I have actually been a loyal Wells Fargo customer for 25+ years. I recently stumbled on a $40 monthly fee, added with no communication when my balance temporarily dropped below my minimum balance requirement in that account. I was very disappointed and surprised when I discovered this.

Last year traditional banks raked in $34 Billion from overdraft and ATM fees alone. Most banks charge monthly fees or require balance minimums. In 2019, it is unfortunate that 40% of US households cannot even cover an emergency $400 expense, let alone bank fees. They also charge for checks and ATM’s, all to access your hard earned money.

In school we were never taught about money. We learned about home economics, sex-ed, math, science and history, but not a crucial life skill, money 101. How does the average college student graduate today with an average of $5,000 in credit card debt and $37,172 in student loan debt? It doesn’t help when credit card companies and banks incentivize you to sign up for products, knowing you lack the knowledge or means to navigate the complicated financial landscape. (Real credit card offer below that was sent to an 18- year-old. 31.65% interest? Seem excessive?)

When I was a Freshman at Wesleyan University (go Cardinals!) I signed up for multiple credit cards, not because I actually wanted or needed the cards, but because of the free giveaways- t-shirts, hats, water bottles (so tempting as a poor college student, right?!) I ended up throwing all but one away, not realizing I needed to intentionally close each account. Four years later, as I was preparing to enter the real world and browsing apartments, I was curious what the difference was between renting and buying. I called multiple banks mortgage shopping and tried to find out if it was even possible for a college senior with little money, and no real income or credit history to buy a house.

The first question most banks asked for after gathering basic information was “What’s your social security number?” I gave out this information, not understanding how credit inquiries work or terms they kept referring to such as open lines of credit, debt to income ratio and basic lending practices.

The tenth call was one I will never forget, and another pivotal step in my journey. I called Peoples Bank and spoke to a lender named Tony who helped walk me through best practices for lending and credit. I took that opportunity to “clean up” my credit profile, straighten up my finances, scraped together every dollar I had to purchase my first home which got me into the real estate market at 22 years old. (Thanks Tony. Thanks People’s Bank)

After many East Coast winters, I moved back to the Bay Area to pursue my love and interest for early stage startups. I’ve spent most of my career in Silicon Valley building and creating innovative technology companies and I am grateful for my mentors, family, friends, and colleagues that have helped guide and support me along the way.

Gyft

My last company Gyft was my first run in Fin-Tech. I was newly married and discovered a problem in the gift card space I wanted to fix. A mutual friend connected me to my Co-founder Vinny Lingham, and we teamed up to create the first digital gift card platform that enabled consumers to upload plastic gift cards to their phone and buy and send gift cards digitally. We quickly became respected thought leaders behind a $100B industry that was (before Gyft) predominantly offline.

In 2014, we were acquired by First Data Corporation. I dusted off my dress shoes and got fitted for some new suits, as I had never worked for a large corporate entity, let alone a financial services company. After two years, I learned a lot about a large legacy business but it was clear how much I thrive in the early stages of building and creating things.

I took some time off to figure out what’s next. I wanted to find something I was passionate about — that had a clear mission, was a massive industry to disrupt and could combine social good across millions of people.

Money is a very sensitive subject for most, one that friends and even families do not often discuss. It doesn’t matter if you have it or not, live in Silicon Valley or Omaha, Nebraska — money is challenging and it is something we are meant to figure out by trial and error but it shouldn’t have to be that way.

As a father with two young kids, my wife and I constantly think about raising them to be well-rounded with a strong foundation of faith, emphasizing education, family and treating others with respect. The fact that so many kids are expected to figure out a crucial life skill like money is a pain point for many and it is time to do something about it.

Meet Step

For the past nine months, I have been busy behind the scenes combining my passions and life lessons with my expertise to set up the next big challenge. A trusted banking platform that works with today’s modern lifestyle and teaches not only teens, but also families how to better manage their money.

I was introduced through a friend to my co-founder, Alexey Kalinichenko who spent years at Google and Square in technical roles. He was most recently CTO at Token.io and looking to start something new in Fin-Tech. We shared a vision to disrupt traditional banking and pulled together a few of the early Gyft team to help us tackle this challenge. It’s a privilege to partner again with George Bowen, Martin Treurnicht and Giyom Lebleu. Our team has 50+ years combined experience in financial services.

Today, we are launching Step, a modern-day financial services company built for families and teens. We are building the industry’s first all-in-one banking solution that integrates certain key benefits of a checking, savings, credit and debit cards into one easy-to-use account. With Step you get a deposit account to manage your money with no fees and industry leading interest on your money at 2.5%. You also get a secured spending card and the ability to send and receive money instantly from your phone. By offering a platform starting with teen’s financial needs, families can work together to guide their children toward financial independence and responsibility each step of the way.

There are currently 75 million children and young adults under the age of 21 in the U.S. This underserved demographic is overwhelmingly forced to deal with cash, even though their lives are digital. They cannot use cash to shop online, pay for an Uber, order from Amazon, download music or participate in online gaming sites like Fortnite. The ability to transact and have access to your money instantly is essential — as checks and cash become less relevant in today’s digital world.

Step is building a modern solution for the next generation, stripping away traditional banking methods. We are excited to announce that we have raised a $3.8M seed round. I want to thank our investors Crosslink Capital, and Collaborative Fund for their support, especially Taylor Greene, Joe Guzel and Eric Chin who are friends and partners on this journey.

Starting today, parents and teens can get early access, sign up for Step, and begin earning money by inviting friends. We will be rolling out the Step platform in the Spring on a first-come, first-serve basis. In the meantime, register to be on our waitlist — you get $1 when you invite friends (your friend also gets $1) and there is no limit on how much you can earn. To learn more and sign up for early access, please visit www.step.com or download the Step iOS or Android app

I look forward to the next chapter.

Your money. Your way.

Cheers,

CJ

Special thanks to Amber, Caitlin, Jody and Woody for reading this first.

Thanks Sarah Perez and @techcrunch for covering.

Follow me on Twitter: @cjmacdonald

Follow Step on Twitter: @stepmobile

Follow Step on Instagram: @stepmobile