Did Tandem just destroy Chip’s business model?

fabsaver

Keezing said:

Personally I think this was a very strategic move by Tandem - with a specific competitor in mind.

I had similar thoughts myself when they announced the move.

The timing is interesting as Tandem have recently announced securing a £20 million investment. I doubt such a much would have been feasible without that.
https://www.tandem.co.uk/newsroom/tandem-bank-secures-ps20-million-after-successful-capital-raise

From their press release note the use of 'profitable': 
"the business seeks to continue its mission of building the UK's leading purpose-led, profitable digital banking platform"

Zopa_Trooper

Like someone said, they could park all the money invested in the BoE at 5.25%. That 0.25% difference using other peoples money isn't a bad return for basically being the middle man. It's only greed and I guess overheads that stops other companies doing it.

Keezing

Zopa_Trooper said:

Like someone said, they could park all the money invested in the BoE at 5.25%. That 0.25% difference using other peoples money isn't a bad return for basically being the middle man. It's only greed and I guess overheads that stops other companies doing it.

I think it’s the overheads that’s the problem. Chip have consistently priced their rates around 0.5% from the base rate. They’re now facing around a 50% reduction in the spread if they decide to compete with Tandem. That’s huge.

And if they don’t, they face losing their money to Tandem. Tricky.

[Deleted User]

They are both good. When Chip has the best rates was with Chip, now Tandem offering 5%, moved the bulk of my money there. They both have their customers. 

Funny was just at a Santander branch to withdraw an told the cashier I move funds from my online account paying 5%, she asked if it was a fixed account was like instant access account, she said please write the name of the bank on a piece of paper for me