While many might have been surprised by House of Fraser’s announcement that it was investing at least £35 million in Tandem, a U.K. startup that’s building an app-only bank, the department store’s chairman said the deal “is just one illustration of how we’ll deliver a meaningfully different set of services to our customers.”
House of Fraser will offer financial services to customers through its partnership with Tandem, which gained its banking license in 2014 and currently offers a savings tool that lets people monitor spending on any bank account. Although it hasn’t officially launched, it began rolling out its app last month and plans to launch credit and debit products next year. It’s currently testing its products with a group of about 10,000 customers.
Rick Knox, cofounder of Tandem, spoke to Business Insider to explain the logic of the deal for both sides.
“We’d been talking to a number of retailers. House of Fraser was one of the most far-sighted,” he said. “They’re really interested in serving their customers. We were looking for partners that were interested in actually teaming up with us and doing their customers a favor. Helping save their customers a load of money and eventually bringing our banking products to them.”
He went on to explain that House of Fraser is owned by Chinese investment group Sanpower, which owns Nanjing Cenbest department stores in China. They’ve created a financial services empire off the back of that base, including wealth management. House of Fraser hopes to replicate this successful push into financial services in the U.K., while Tandem plans to offer a cobranded version of its products to House of Fraser customers, which the department store will sell to its customers.
“There is a global aspect to the deal, they’ve got a big China presence, a big U.S. presence, a bit scattered around other countries,” said Knox. “That’s definitely in the roadmap but not the first step.”
Tandem was valued at £65 million in its last funding round, and Knox wouldn’t disclose its latest valuation. Tandem has raised over £55 million to date, including more than £1 million through crowdfunding. Backers include eBay Cofounder Pierre Omidyar.