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U.K. department store House of Fraser invests $43M in app-only banking startup Tandem
U.K.-based department store chain House of Fraser Ltd. has said it’s investing £35 million ($43 million) into an app-only banking startup called Tandem Bank Ltd.
The investment is part of a tie up between Tandem and House of Fraser that will see the department store offer unspecified financial services to its customers via the banking app startup, which was founded in 2014. Tandem’s banking services, which aim “to improve people’s relationship with money through an innovative and customer-centric approach,” can only be accessed via its mobile application, because the company does not have any physical bank branches.
Tandem secured a British banking license one year ago, and is covered by the U.K.’s Financial Services Compensation Scheme, which means each of its customers are insured by up to £75,000 ($92,000) in case the bank goes out of business. At present, Tandem only offers its customers a basic savings account, but next year it’s planning to introduce credit cards for the first time. Current accounts and loan services are expected to be introduced within the next year too.
House of Fraser said it will provide more details about its new partnership with Tandem early this year. “House of Fraser is committed to a transformation of its business over the next five years and this new partnership is just one illustration of how we’ll deliver a meaningfully different set of services to our customers,” Frank Slevin, chairman of House of Fraser, said in a press release.
Last October, Tandem became the first U.K. bank to start actively telling its customers when they can get better deals with a rival bank, promising the initiative would save customers an average of £2,500 ($3,075) a year. The caveat is that Tandem will make a commission from its customers when they switch to an alternative bank, with whatever savings they can obtain being split 50/50 between Tandem and the customer.
Tandem is one of several app-only startup banks in the U.K., which have been dubbed as “neobanks” by the media. Others include Atom Bank Plc., Monzo Bank Ltd. and Starling Bank.
Image courtesy of House of Fraser via Instagram
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