The digital bank is the bank of the future. With precious few months before PSD2 is implemented and banks are set to open data vaults readily accessible to their nimble third-party banking counterparts, fintech has never had such a clear opportunity to disrupt incumbent banking.
FinTech Connect caught up with Nick Bennett, Chief Operating Officer at Tandem Money, to discuss all things open banking, incumbent-challenger M&A and discuss the evolving priorities for one of the UK’s best publicised and top funded digital banks.
FT: What is distinctive about Tandem’s business model and how would you to claims that M&A in the challenger banking marketplace is “inevitable”?
NB: Tandem’s model is focused on our customers. Our goal is to empower customers to get the most out of their money – allowing them to create a complete picture of their financial life and providing insights into their spending and how to save, complimented by financial products and services which solve specific needs. What also makes this distinctive is that we have co-created this with our co-founder community – rather than pretend we have all the answers we asked them what they wanted out of their Bank. This customer proposition is powered by a strong set of digital technology and data capabilities that will allow to rapidly innovate as we add new services and features.
In relation to the question of M&A, I wouldn’t discount it in the broader challenger banking space where I suspect some smaller players will struggle to thrive given competitive and regulatory pressures. In the case of digital banking challenger category I would say it is still a little way off given this still an emerging business model.
FT: How have your priorities changed during your tenure as COO at Tandem?
NB: From the outset, my priority was on completing the Build phase for Tandem. This involved everything from setting up the IT infrastructure required to run our platforms through to establishing the Customer Service and Operations functions. We have also been testing our products with our co-founder community for a number of months now which has been a fantastic opportunity to find out what works and what needs refinement. I would add that a big focus throughout has been on our people – securing the best talent and making sure that Tandem is a fun and rewarding place to work.
FT: Complete this sentence. PSD2 will result in…
NB: breaking down some of the barriers that currently exist for new entrants trying to innovate in a highly regulated banking market. This will be a question of evolution rather than revolution – it will take time to change consumer behaviour and perception around data security and the big banks will do their best to drag their feet. The opportunity for businesses like Tandem with distinctive propositions that can exploit PSD2 is clear though.
FT: With the appetite for agile, digital-first capabilities and simultaneous branch closures all the rage for a number of incumbent banks, could the banking giants be starting a process of self-disruption?
NB: If you look at the big banks motives, a big part relates to a desire to save cost not deliver a better customer experience. It is true that some banks are investing in innovation but it tends to be on the margins of their business model – transforming the core of their business given the challenges of culture, risk appetite and legacy systems is proving to be exceptionally hard. So overall I am doubtful that we will see much meaningful self-disruption in the next few years.
FT: As the UK’s largest fintech exhibition, what will be the core message you would like to communicate to our audience at FinTech Connect Live later this year?
NB: My message would be twofold. Firstly, take the opportunity of an event like FinTech Connect to collaborate and share experiences – to succeed we need to build networks. Secondly, be brave and continue to innovate and take risks.