Tandem Bank is the latest UK challenger to undertake a business pivot in the midst of the pandemic, shutting down its credit cards to focus instead on plain vanilla savings and loans.
The Coronavirus epidemic is upending the ‘build-it-and-they-will-come’ business models of app-based banking challengers as potential funders take a closer look at P&L statements and revenue-generation.
In a sign of things to come for Tandem, the bank in January rebranded its credit card line as ‘The Travel Money Cash Back Card’, and then decided to slap a £5.99 monthly fee on the product.
News of the shutdown of the credit card business led to customer confusion on social media about the sudden change in direction.
Hi, we’ve made the difficult decision to close our cards to allow us to focus on new services in savings and helping customers towards their goals. This doesn’t mean that we won’t offer a spend service in the future though and we hope the new offerings bring you value!
— Tandem (@Tandem_Bank) September 3, 2020
Tandem did manage to conclude a £60 million funding round first agreed in March and used some of the cash to acquire green lender Allium last month. Allum specialises in financing energy efficient home improvement projects, from home insulation, low carbon boilers and double glazing, to solar panels, heat pumps and home charging stations.
Allium will be the focus of Tandem’s new business model, which will follow an old-school deposit and lending route, far removed from its initial lofty ambitions to overturn the banking old guard.