House of Fraser, the U.K. department store operator, is making a £35 million investment in an app-only bank as a way to give shoppers a banking tool and payment means.
According to a report, House of Fraser has worked with Tandem to create the app-only banking service. Tandem received a banking license in 2016 and is one of a growing number of digital-only banks that are taking on the traditional banks in the U.K. According to the report, Tandem raised greater than £30 million in funding last year, which included an investment from eBay Cofounder Pierre Omidvar. The report noted House of Fraser, which was bought by China’s Sanpower in 2014, has a loyalty and credit card offering with NewDay.
Tandem and the U.K. aren’t the only ones that are focused on digital-only banks. Early last year, Canada’s Equitable Bank rolled out its new digital-only bank, EQ Bank, with a modest goal in the first year of having 10,000 customer sign-ups. In less than two months, it had 15,000 customers. The positive consumer response perhaps wasn’t a complete surprise, considering the initial interest rate for the savings account was 3 percent. The challenge for the bank will be remaining competitive when the interest rate is ultimately dialed back and the offering itself — namely its features and user experience — need to steer the ship.
