Tandem is the UK’s next generation digital bank, helping customers live a better life with their money.
We believe that UK banking customers still do not get good service from their banks. In 2014, 62% of UK banking customers surveyed didn’t believe their bank valued them as a customer and only 35% believed their bank provided effective customer service.
Tandem aims to re-define customers’ relationship with their bank and improve their financial lives, by building a bank from the ground up that puts customers first. We are using customer research from our Co-Founders on what they really need from their bank, and this informs the design and build of our app, systems and service.
We will offer a full range of traditional and innovative banking products, including current accounts, loans, savings and credit cards, all within an intuitive and engaging banking app that will allow customers to see all their financial information in one place, and offer intelligent notifications and guidance to help them get the most out of their money.
Tandem’s purpose is to enrich customers lives. This means actually helping customers save money and avoid wasting money on their personal finances. Customers will be more on top of their money with less time spent on it.
Tandem was founded by Ricky Knox and Matt Cooper in 2014. Ricky is a successful fintech entrepreneur, having founded Small World FS, one of the largest money transfer company in the world along with Azimo, one of the fastest growing digital remittances businesses in Europe. Matt Cooper was part of the founding team of Capital One Bank, the 10th largest bank in the US by assets and the 5th largest by customers, and was he was instrumental in successfully bringing the bank to Europe in the late 90s.
Tandem received its banking licence in November 2015, and this crowd funding round is an opportunity for a wider group to participate in the growth of the bank.
Tandem’s philosophy includes not only a desire to provide best-in-class service, but also to use its products and services to improve the financial situation of its customers.
Tandem hopes to achieve this by combining a single platform where Tandem helps customers with their money through a customisable dashboard and intelligent notifications that identify opportunities for them to save more and spend smartly.
Substantial accomplishments to date
We have come a long way in two years, and in the process passed a number of significant milestones:
• Granted our banking licence by the Bank of England and FCA, which enables us to take a limited amount of deposits whilst we ensure our systems are operational and optimised. During the summer we are aiming to have these restrictions lifted, which will enable us to offer a full service to the public.
• Assembled a world class team of entrepreneurs, disruptors and financial and banking experts - we are currently 90 people and growing every week.
• Grown our community of 7,000+ Co-Founders, who are actively engaged with product development and the Tandem brand, through events, workshops and our online hub, who are helping us build a bank with customers at its heart.
• Our banking systems and app are largely built, and our first test accounts are live on our systems, with testing mainly completed. We will be rolling out within our Co-Founder community over the coming months.
• Raised £22m from an impressive range of investors including eBay founder Pierre Omidyar’s investment fund, Venture Capital firms (Route66 and eVentures) and various High Net Worth individuals, alongside our founding team.
Tandem plans to make money in two ways. First, in common with traditional banks, we intend to generate revenue from interest margin and fees.
The interest margin is the difference between the rates we pay on deposit products and the rates we charge on our borrowing products.
We also intend to generate some revenue from fees (e.g. for unauthorized overdrafts), but our intention is to keep these to a minimum, and for fees to form a much smaller proportion of our revenue than is the case at traditional banks.
Second, we intend to make some money from helping customers to switch their products, in the same way that many price comparison websites currently do. Any commission that we generate for doing this will be split with the customer. Any opportunities for customers to switch will include products from other suppliers as well as from Tandem if this is in the customers’ interest.
As Tandem will be digital and telephony only, we won’t need to pay for costly branches and the staff to run them – we can pass these savings on to our customers, in the form of more flexible, competitively priced products.
Use of proceeds
Tandem initially intends to raise £1m, in conjunction with the existing shareholders. The money raised will be used to fund the launch of the bank:
• Finalising development of our core banking platform
• Testing our banking systems to make sure that it’s safe and secured
• Finalising our mobile app, our robo-advisor and website
The crowd round will only form a relatively small proportion of the overall funds required to launch the bank, with further fundraising planned from institutional and other large investors.
Our primary purpose in raising money through Seedrs is to involve customers more closely in building the bank.
We believe Tandem will ultimately appeal to the majority of the UK adult population, however our initial target audience are older millennials (28-35 year olds) who value help with their finances.
We believe Tandem will appeal to those people who don’t necessarily feel “on top” of their finances, and are somewhat reluctant to engage with them. Our extensive research and testing suggests this is a significant proportion of the population.
We believe that Tandem’s approach to banking will help these people to feel more confident in their finances and make informed decisions based on intelligent notifications about their spending and banking.
Tandem is looking to appeal to a really wide range of people who don’t necessarily understand or feel able to manage their financial lives as well as they’d like to. Lots of us have times when we bury our heads in the sand because it’s all too complicated and money makes us feel scared or less capable. These are the moments we are trying to help. And this isn’t a small problem: it’s actually a huge proportion of the population that aren’t getting the help they need from anyone, let alone their Bank.
Characteristics of target market
Banking is one of the UK’s largest industry, with revenue of the top 5 banks in 2014 estimated at over £65 billion. Tandem has deep banking and digital experience throughout its team, both in designing the best products to serve changing needs, and understanding the most helpful, intuitive and frictionless ways to interact with and serve our customers.
Tandem has undertaken extensive research to understand its customer needs and behaviours, and we have an active group of over 7,000 Co-Founders to help us develop and test our products.
One consistent message from all of our research is that most people want to feel on top of their finances and that many currently don’t, and are either scared to look at their statements or are simply not engaging with them. This is where Tandem helps – we are aiming to provide a simple, clear, and smart digital platform that answers the question “how am I doing?”, and provides intelligent notifications to help customers spend smarter and save more.
Tandem’s digital approach provides a platform to reach our target audience and acquire customers cost-effectively. We will focus on digital marketing, making heavy use of social channels. Our active network of Co-Founders will act as Tandem advocates and referrers. Our digital platform and use of intelligent notifications will be used to make sure our products meet multiple customer needs.
With our Co-Founders, we’re tackling the big banking stuff from the bottom up. Our Co-Founders have a say in everything we do; from the kind of accounts we offer, to how our brand looks and feels. Perhaps even more importantly though, our Co-Founders feel relaxed and involved enough to tell us when they think our ideas could be better; they break them down and then we build them back up, together.
Tandem is all about rewarding good behaviour rather than punishing bad behaviour – or everyday mistakes, as we prefer to call them. One example of this is that Tandem intends to recommend offerings from other banks if we think they are better suited to the customer than our own. It’s absolutely fundamental to make it about the customer and getting the right answer for them, rather than pushing anything onto them.
Ultimately we believe that our purpose will support higher levels of referral and reduce customer acquisition cost.
We believe Tandem’s combination of marketing leading banking products and a pro-active robo-adviser which will help customers live a better life with money is differentiated in the market.
Tandem aims to demonstrate that it can improve the financial situation of its customers by:
• Aligning the firm’s values and incentive structure with the customers’ interests. All staff will have targets to improve the satisfaction and financial situation of the customer embedded in their remuneration, and every product and service will be tested against this core value.
• Being fair and transparent in pricing and fees. Tandem will avoid charging customers’ penalty fees (e.g. overdraft fees) altogether to help them avoid falling into debt.
• Making ‘Improving customers’ financial situation’ core to its product design principles. Tandem will identify and fill gaps in the market for a product set that better meets customers’ needs.