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February 21, 2018

Is Tandem ready to compete?

By Patrick Brusnahan

British challenger bank Tandem has launched its first product; a credit card. With 0.5% cashback and zero overseas transaction fees, it looks a competitive offer. Patrick Brusnahan talks to Tandem’s CTO Paul Clark on the product and Tandem’s future

Tandem has been hyped, as many new banks are, to be the next big thing in the sector. However, there have been some stumbling blocks.

In March 2017, Tandem lost its banking licence over concerns regarding its funding. It was set to receive £29m ($36m) from House of Fraser, owned by Chinese conglomerate Sanpower Group, but due to limitations placed on Chinese firms investing abroad, this fell through.

Since then, Tandem has acquired Harrods Bank, taking over Harrods’ banking licence and its customers. This includes £375m in mortgages and £400m in deposits.

Finally, Tandem has launched its first product, a Mastercard credit card.

Credit cards

Tandem’s chief technology officer, Paul Clark, says: “At Tandem, we’re not trying to compete by having the best credit card on the market. It just so happens that it is a great credit card. What we’re trying to do is solve problems for people.

“One of the big problems that people have is when they go abroad on holiday, when they go travelling, most aren’t aware that they’re being stung by their current provider.

“For us, it should be the case that you can go on holiday and, firstly, not worry. Secondly, minimise the cost so you can feasibly have another holiday at another time. We’ve got a great credit card, but that isn’t the be all and end all.”

One of the key aspects of Tandem that it wants to highlight is that it helps its customers with their money. It refers to itself as “your better half with money”.

Features to this end include instant notifications abroad. Alerts go to the user’s phone with key details such as how much has been spent and the FX rate.

A number of new entrants, such as Monzo and Starling in the UK, have focused on current accounts. However, Tandem is not in a rush to compete in that area. Clark says “good luck” to companies wishing to compete in that space.

Clark explains: “You’re more likely to get divorced than to switch current accounts. That’s why we don’t have current accounts right now; we’re doing savings and credit products. There will be another credit product at the end of the quarter.

“We ask people to bring their current account to us, we aggregate their bank details and we analyse the way they spend their money and we help them spend it wiser. We think there’s a great deal of demand for this. There’s less loyalty here than in current accounts.”


People are more likely to switch credit card then current account. The FCA claims that around 14% of consumers with a credit card take out a new one. Meanwhile, the switching rate for current accounts does not even reach 5%.

With many people to aim for, who is Tandem targeting?

“There are a lot of people out there that don’t want to spend time being great at finance,” Clark explains.

He adds: “They’re not finance geeks. The banks make a lot of money out of the fact that finance isn’t that interesting. Consumers want to spend money; they don’t want to spend time with money.

“This card is aimed at reliving people financial stress because you can trust it and it’s on your side. Generally, it’s people who have a bit of money but aren’t so savvy with their finances. They’re not sitting at the weekend with a spreadsheet checking every single bill, which is the majority of people to tell the truth.”

Comparisons will be made between Tandem and Monzo. Both firms have had cards with zero fees abroad.

Clark points out the differences: “The thing about Monzo is you put money onto the card in Sterling and take it out in whatever the local currency is and Monzo take the hit. With us, we’re saying it’s not a prepaid card, it’s a credit card. So go on holiday, but don’t take money out, put it all on the card and get no charges and a great FX rate. It’s a better proposition than Monzo.

“Monzo is better for cash, but they were getting hit with that. I think we have the edge over Monzo.”

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