“What does a good bank feel like?” That’s the first word from Tandem Bank, the latest hot contender on the UK challenger bank scene. The goal is to make our cash work for us – not the other way around – although that’s pretty much the goal of all the new banks. So how is Tandem different? After spending an hour in the company of Ricky Knox, Founder and CEO of Tandem Bank, it becomes clear that this bank has plans to make its mark – there’s a folksy attitude to Tandem: “Folksy, yes, that’s our voice!”
The Friday feeling is palatable at Tandem’s office up by King’s Cross in London, where the pizza boxes are stacked high after from the day’s “Lunch and Learn” meeting. Although it’s very possible this is how Knox rolls on a daily basis – the founder is laid-back, cheery, a bit sweary, and very enthusiastic about what Tandem is working to achieve. The bank is getting ready to launch to the public in the first half of 2017, after operating in beta since starting out in November 2015.
Data, not current accounts
“Our objective is to sort out people’s finances, and make it blissfully easy to manage all that annoying stuff you might have had to do on a Saturday afternoon,” says Knox, when we meet just before Christmas. (In February, Tandem announced Knox has stepped up from Deputy CEO to replace Peter Herbert as CEO.) The goal of the Tandem app is to help people handle their finances with a minimum of effort – the people who’re on top of their budgets already don’t strictly need it. But even for them, there are things that sound like they might be attractive. Knox brings up the Tandem home screen on his app: “We pull in your other accounts. Here’s an HSBC current account, here’s a rewards card. … On the home screen you’ve got [what we call] spending money, which helps you figure out how much you’ve got [available].” A lot of people don’t actually open their bank statements, says Knox, so this would be a way for them to become aware of things like a merchant having charged them twice, or they’re paying far more than the average for their electricity. “A big part of what we do is save customers money, but we call it finding money you never knew you had.”
Tandem provides a card – there’s a choice of four bright jewel colours – but it’s not the usual pre-paid cash card available from most other fintech startups. It’s in fact a credit card. Tandem is planning to offer savings accounts too (although as of March those plans are on hold due to funding setbacks). So why no current account? There’s a few reasons for this, says Knox, but mostly it’s because they don’t think they will need to do that to achieve their goals: “While we think the current account is a really useful transactional account, it’s quite difficult to shift people from their current account provider. They don’t necessarily want to, and there’s no particular reason to shift them if we can access all their data. I suppose it’s nice if people would rather have a Tandem card, but we’re a more open platform than that.”
Tandem takes a more collaborative approach – both with established banks as well as the other challenger banks. But that doesn’t mean Knox is lacking in grand ambition: “Oh we are definitely planning, hoping, to be one of the largest banks in the UK in ten years’ time! But we think the way you do banking will change over time.” So how does Knox expect to get from here to there? “It depends on what customers want,” he says, before admitting that sure, in an ideal world it might be nice to have customers who use Tandem exclusively. There’s a lot of work to do before we can talk about that, though: “But if we do an outstanding job of serving them, they are going to be like, ‘Why the f*** am I using HSBC? Why don’t I just move it all over to Tandem, they’re doing a great job?’ But you’ve got to build trust in order to get there.”
Out of the banking Dark Ages
Knox, who’s previously a co-founder of money transfer companies Small World and Azimo, first set up Tandem Bank in 2014 alongside Matt Cooper, who was part of the founding team of Capital One Bank. Tandem raised £22m from venture capitalists last year, before adding another £2.3m in a crowdfunding round on Seedrs last May – this led to a £65m valuation even before launch. In December, Tandem secured a £6 million investment from Chinese-owned House of Fraser, but the startup lost an expected £29 million boost in March over concerns that Chinese authorities would not approve the investment. Tandem said in a statement that this setback has not changed its determination to reduce the stress people experience with managing money.
The start of Tandem stemmed from this idea of what a good bank feels like, says Knox. “My personal view is that we’re in the Dark Ages when it comes to financial services. … Right now the banks mostly don’t act in our best interest, they put products out there that are very difficult to understand and manage for the average layman. We think there’s a massive opportunity to build something that’s actually aligned with trying to get the right outcome for customers, and to play a very different role from what a bank currently plays.”
To explain what he means by this, Knox launches into a story about how, back in the day, he used to end up playing the same CDs over and over for months – he simply couldn’t be bothered to spend time shopping for music. But now he’s got Spotify, which plays him new tracks perfectly attuned to his tastes whenever he wants – this has revolutionised the way he listens to music. “Right now, money’s like that,” says Knox, referring to how his former self was stuck with crappy chart topper CDs. “Most people are like me with my music: ‘Oh s*** the card didn’t work! F*** I’m out of money!’” He laughs, apologising for swearing. “Do people save before going on holiday? No, they get the credit card out. Money is generally a fiasco in people’s lives, but they are quiet about it and don’t tell anyone.” Knox isn’t “skint” all the time anymore, but he used to be and he remembers what it was like and he wants to fix it. “Spotify is a service, it’s a solution to the music in my life. We at Tandem are providing a solution to the money in your life.”
Tandem currently has about 10,000 so-called co-founders – those are the people who’ve been using the product ahead of the launch. They get a (very modest) share in the company, a special black Tandem card, and management invites them to the office to test out new features, and hear their opinion on things. But while Tandem is certainly exploring what people actually want from a next generation bank, this doesn’t necessarily mean taking the beta users’ word as gospel. Because the problem with early adopters, says Knox, is that they aren’t representative of the general public. “Designing solely for your early adopters is a screw-up,” says Knox, explaining how he has a dozen cards from various fintech startups in his wallet, and yes, he uses them all on occasion. But there aren’t actually that many people who can be bothered to do that: “Designing for your early adopter audience gives you 100,000 customers, but there are 60 million people out there, and they want something completely different. We come up with the ideas and we test them on our co-founders, and sometimes they come up with suggestions. But mostly it’s the other way around.”