Startup bank Tandem on Thursday smashed through its £1 million crowdfunding target in around 15 minutes. We thought it would be a good opportunity to run this interview with cofounder Ricky Knox, first published last month when the crowdfunding campaign was announced.
He talks about what Tandem is trying to build, why it’s crowdfunding, and his relationship with the other startup banks on the scene. Enjoy.
App-only startup bank Tandem is following in the footsteps of fellow digital challenger bank Mondo and launching a crowdfunding campaign.
Tandem is aiming to raise £1 million ($1.4 million) in a campaign that goes live in mid-May. The startup has already raised “tens of millions”, according to founder Ricky Knox, from investors including eBay founder Pierre Omidyar. [UPDATE: Since we first published this interview Tandem has revealed it has raised £22 million so far from investors at a £65 million valuation.]
Tandem, which has a banking licence but has yet to launch any products, has already given away 5,000 free single shares to so-called “cofounders” who are giving input on how the bank should look. The startup is already holding events with these investors where they can look at early designs and give feedback.
Knox says the crowdfunding is an extension of this approach: “In the context of what we have raised and the money we’re going to raise, this isn’t ‘fund the bank with £1 million.’
“This is an opportunity for our cofounders who came to me and said I want a bigger share in the business. Also the public — previously our cofounder campaign was invite only. Now if you don’t have a code you can register for the crowdfunding and you automatically become a cofounder.
He added: “We’re going to keep involving cofounders all the way through our launch and beyond in everything we’re doing.”
Knox told Business Insider that crowdfunding investors would be able to buy in at the same price as Omidyar did in the last investment round, but wouldn’t disclose how much Tandem is worth. He said it is “more than Tom [Blomfield, CEO of app-only bank Mondo] and less than Atom.” That puts its value somewhere between £30 million and £150 million — a big range.
Knox adds that Tandem will be “raising more of an Atom number than a Mondo number in the summer” in a further funding round. Atom, the first app-only bank to be licensed in the UK, raised £45 million from Spanish bank BBVA in November.
‘Rivalry is a bad way of describing it’
Mondo, another app-only bank, crashed CrowdCube with demand for its crowdfunding campaign in March, eventually raising £1 million in just 96 seconds. Is there a rivalry between the two?
“I think Tom [Blomfield, CEO of Mondo] is awesome,” Knox says. “We helped him write his business plan, his application to the Bank of England. We’ve reviewed all his numbers. He’s helped me out on tech stuff, absolutely. Rivalry is a bad way of describing it. It’s exciting to have more people in this movement.
He adds: “Basically, we’re trying to co-create the bank with our future customers. Tom is doing that in the public forum way, with hackathons and stuff. We’re doing the private way, but obviously still trying to get everyone involved.”
‘Our aim is to make you better off and totally on top of your s**t’
Tandem’s future customers will be “guys who are a bit like me,” Knox says, “who are a bit rubbish with their money and can’t be arsed to spend Saturday afternoon budgeting.
“Our primary focus is helping you sort out your finances. Our aim is in the future to save you £2,500 to £3,000 a year on all of your outgoings. We’ll run through everything and figure out how we can get you a better deal on all the stuff you’re buying right now, whether it’s your utility bill, whether it’s credit card, your mobile bill. Our aim is to make you better off and totally on top of your s**t.
“The point for us is we’re not designed for finance geeks who already are on top of their finances. They have already got plenty of places they can go, they can hang out on MoneySupermarket.com.
“What you really want to know is am I going to run out of money this month and if I am, what can I do about it? Let’s face it, 90% of the UK runs out of money at the end of the month. That’s the problem.
“If you can tell me ‘Hey, you can half your gas and electricity bill with two minutes work and keep going to restaurants’ — we’ll that’s a f***ing nice solution! That’s where we’re kind of coming from.”
‘There is a different business model’
Tandem is one of a number of new branchless, digital-only banks preparing to launch in the UK this year. The fintech chief of Dutch bank ING, Benoit Legrand, is sceptical, telling BI recently: “They’re flourishing everywhere but we’re still waiting for the business model to show up. Where is the money? Where is the return?”
Knox certainly doesn’t agree with that assessment, saying: “There is a different business model. At a high level, banks make money out of two things. One is net interest margin. The other is kicking you when you’re down. You’ve screwed something up — you’ve been charged an overdraft fee or gone over your limit on your credit card.
“It’s effectively a super-aggressive tax that poor people and disorganised people pay. It’s a penalty for being detached from their finances. We believe that is fundamentally wrong. Our model has almost none of those fees in it.”
Knox wouldn’t go into detail about how Tandem will make money differently, but said it did have plans that differ from a traditional bank.
Tandem has yet to launch any products but Knox says: “We’re kicking off early testing with our accounts now.” Products will be launched later this year and Knox hinted a savings account and credit card would be first.
Knox says: “Eventually you may say we’re so awesome that you’ll move your current account over but you make that decision. We’re not going to be competing with HSBC spending £1,000 per customer to buy a current account. I’m just not interested. If you do an awesome product you don’t have to go out there and buy customers with a f***ing big gun.”