Tandem Bank, the U.K. challenger bank, is launching a new savings account powered by its “Autosavings” feature designed to make it easier to save.
Paying 0.5 percent interest, the Tandem Autosavings account is effectively a flexible savings bank account built on top of Tandem’s existing bank account aggregation app and the various credit cards it offers. Using a number of rules, it will automatically put money aside based on your spending habits and what its algorithm deems you can afford.
The first rule, known as “Round Ups,” will move the change from small purchases to your Tandem Autosavings account, enabling you to round-up to the next pound across spending on all of your connected bank accounts.
The second rule, dubbed “Safe To Save,” claims to use machine learning to calculate how much you can save based on the income and outgoings of your connected accounts. Within the Tandem app you can set your saving level using a slider from minimum to maximum savings, which aims to save between 5 and 15 percent of your income.
Outside of these rules, you can also choose to top up your Tandem Autosavings account at anytime. Money moved across to your Tandem Autosavings account is pulled via the debit card you have added to the app and transactions are processed by Stripe, as we previously reported.
“We spend a huge amount of time speaking with our users, understanding the challenges they face with their money, and what we can do to help,” Tandem’s Matt Ford tells me. “A consistent theme which arose for many of our users was the need to save. People either felt like they were unable to save at all (as they battle through to the end of the month), or were trying to save, but spending got in the way and they were unable to reach their goals fast enough”.
Ford says that Autosavings aims to solve these problems by drawing on “behavioural economics principles”. The idea is that by helping customers save small amounts each time they spend, Tandem is initiating a savings behaviour for customers who may have previously felt unable to save.
“Similarly, for those who need an extra boost, we have a rule called ‘safe to save’ which, based on a forecast of upcoming spending and bills, helps sweep any spare cash automatically aside into an interest-bearing Tandem savings account… We’re planning to roll out additional rules over time to find new ways to help customers kickstart and accelerate their savings behaviour”.
Perhaps crucially, Ford says that Tandem doesn’t “sweep” money immediately. Instead, savings are first added to a “virtual pot” that builds throughout the week, before moving across into your Tandem account.
“With a quick swipe, customers can remove any savings items added to the pot before it leaves their current account, and they get a push notification before the money movement occurs so they can ensure that they are comfortable with the saving amount,” he explains. “Also, for people who have aggregated their current account and have the safe to save rule activated, we’re continually monitoring on a day-to-day basis how much a customer can afford to save based on their sending and account balance”.
Meanwhile, Tandem has picked up pace over the last 18 months. Most recently the company launched a credit card for people who find it hard to quality for one. It followed the launch of a competitive fixed savings product, pitting it against a whole host of incumbent and challenger banks, and the original Tandem credit card with cash-back and low FX rates.
All of Tandem’s products are managed via the Tandem mobile app, which also acts as a Personal Finance Manager (PFM), including letting you aggregate your non-Tandem bank account data from other bank accounts or credit cards you might have.
Like a plethora of fintechs, Tandem’s broader strategy is to become your financial control centre and connect you to and offer various financial services. These are either products of its own or through partnerships with other fintech startups and more established providers.
Source: New feed