Teen banking app Step draws celebrity investment
Teen banking app Step has secured backing from some of the biggest names in music, movies, sports and TikTok, raising $50m during a recent funding round.
The Series B was led by Coatue, and saw the return of existing investors along with a suite of high-profile celebrities including Will Smith, via his startup investment fund Dreamers VC, The Chainsmokers, Justin Timberlake, and former NFL quarterback Eli Manning.
Launched by CJ MacDonald and Alexey Kalinichenko, Step is a mobile bank aimed at increasing financial literacy in teens that has attracted 500,000 young users in just two months. The platform offers P2P payments, a Visa-backed card, and does not charge any fees to holders of its FDIC insured accounts.
“We’ve seen massive demand for this new type of all-in-one banking solution,” says CEO and cofounder MacDonald, adding the most recent investment “not only validates what we’ve built, but it will also help us continue to innovate and grow with our users.”
Trending on TikTok
TikTok star Charli D’Amelio (pictured), who has more than 100m followers on the video app, has also come on board as an investor, after initially teaming with Step as the face of its Gen Z-targeted marketing efforts. She says her involvement opened her eyes to how the app provides “the educational resources that today’s teens need but have largely been unable to find—myself included”.
“I’m excited to be able to use my platform to help close this gap and have made a direct investment in Step to help them develop even more useful products,” the 16 year old social star added.
With an estimated spending power of $75bn, Step hopes its platform and educational tools will increase the financial awareness of its young users. Michael Gilroy, General Partner at lead investor Coatue and Step’s newest board member, said: “We think their game-changing technology and grass-roots approach will help capture the next generation.”
Already it seems teens are responding; Step says users have saved an average of three times the amount they’ve spent and are responding well to its spend-tracking features.
Step will pump the new capital into accelerating growth and attracting new talent to its team, which has doubled in size since the beginning of the COVID-19 pandemic.
CMA warns UK and Irish banks over bank transaction histories
Specifically, the CMA named prominent challenger bank Monzo, the Bank of Ireland, NatWest Group, and Virgin Money as not providing customers with records of their bank transactions within the maximum outlined timescale (40 days after closing the account).
Such information is crucial not only for ensuring a smooth transition from one bank to another, but also to provide a foundation for credit applications in the future.
According to the Retail Banking Market Investigation Order 2017, 95% of bank and building society customers should receive their bank transaction histories in at least 10 days.
Reputation: A bank’s greatest asset?
Of the 150,000 customers affected, Monzo was by far the main contributor - 143,000 (95.3%) - with the other three dividing the remaining 7,000.
The extent to which the magnitude of its mistake is attributable to being a digital-only bank is not clear, although it may give some customers pause for thought. With a superior customer experience being among the bank’s greatest assets, continued reputational damage is something that it cannot afford to sustain.
Although the CMA’s action in this instance has been to issue each bank a warning and order the immediate dispatch of all outstanding information, it has warned that future breaches will carry heavier consequences. Measures could include legally enforceable compliance audits on a yearly basis.
Helping customers get a better deal
Condemning the banks for negligence that could negatively impact customers’ desires to take out loans or mortgages, Adam Land, CMA Senior Director of Remedies Business and Financial Analysis, promised that his organisation would remain vigilant to similar behaviour moving forward.
“Banks must comply with all the rules – that includes providing a full transaction history promptly.
“We will be watching closely to make sure these leading names stick to their word and don’t let their customers down again. The Bank of Ireland, Monzo, Natwest Group, and Virgin Money should be in no doubt that the CMA stands ready to take further action if these failures are repeated.
Image source: gov.uk