With its savings account also being closed, does this spell the end of Tandem's consumer offering?
Facing a perfect macro-economic storm of rock bottom interest rates and soaring consumer lending defaults, Tandem Bank wrote to members of its £5.99/month Cashback Credit Card yesterday telling them the card is shutting down.
Tandem launched its Cashback Credit Card back in 2018, its first UK product hot off its acquisition of Harrods Bank and subsequent banking licence, however this March it introduced a controversial £5.99 monthly “membership” in order to make the card more “sustainable”.
It appears the move was unsuccessful, in its message to members yesterday and seen by AltFi, Tandem wrote:
“One thing about being a start-up is that we can learn quickly, and we aren’t afraid to see when a change needs to be made. We didn’t take this decision lightly, though. We tried hard to make our credit cards work for you and us but we didn't succeed.”
As part of the wind-down Tandem is also shuttering the easy access savings account that was offered as part of the membership package, with a now very-generous rate of 1.25 per cent.
From November the savings rate is being slashed to 0.5 per cent, and a new 6.9 per cent interest rate is being added to remaining Tandem Cashback Credit Card balances, ahead of the card’s shut down in February 2021.
Tandem has been quiet for most of 2020, following the confirmation in March that it had raised a “significant fundraise” reportedly of £60m from investors including Qatar Investment Authority.
Then last month Tandem announced it would become "the UK’s first green digital retail bank" and had "acquired" specialist green lender Allium Lending Group.
“Following the successful completion of our recent investment, and the acquisition of Allium Lending Group, we have taken the opportunity to review the products and services we are building for our customers to ensure we continue to solve real people’s money problems," said Tandem's co-founder and CEO Ricky Knox in an emailed statement.
"The impact of Covid-19 on the way people are now spending in the ‘new normal’, coupled with a strategic decision to invest in upgrading the core banking technology that underpins Tandem’s products and services, led us to the decision to withdraw our current credit card offering. That doesn’t mean we won’t be offering a ‘spend’ solution again but simply means our immediate focus will be on building the very best savings products we can and helping more and more of our customers fund their green home investments.”
The question "what is Tandem?" has always floated around CEO Ricky Knox's project to build "a better bank".
The answer has long remained more elusive, never more so than today.
After putting its flagship Cashback Credit Card behind a paywall for six months and now pulling the plug entirely, today Tandem is a confusing mix of uncompetitive credit cards (although its remaining Journey Credit Card looks set to disappear too), low interest fixed-savings accounts, and whatever is left of value from its Harrods Bank takeover in 2018.
On the flip-side, Tandem is acquiring specialist B2B lenders, becoming a "green" bank, and picking up tranches of consumer unsecured debt.
If you're confused, you're certainly not alone.