Digital banking challenger Tandem has narrowed its losses over the last year, with a current annual revenue run rate of £15m, according to new figures seen exclusively by City A.M.
Tandem Money, the parent company to the bank, reported total costs of £23.5m during 2017, up from £20.4m in 2016, according to its latest annual filings.
Costs in the current year are expected to be roughly the same as last year, it is understood, despite having launched two new products.
Tandem is one of the app-based banks racing to build new technology and win users from the five large lenders which currently dominate the British banking landscape. The rivals, which include Starling, Monzo, Atom and banking services firm Revolut, are racing to become profitable while investing heavily in software.
Tandem’s race to profitability has been complicated by its purchase last year of Harrods Bank, which allowed it to regain a banking licence. It had been forced to give up its licence after Nanjing Cenbest, the owner of House of Fraser, reneged on funding commitments.
If earnings continue at the rate hit in August of this year, the bank would earn £15m per year, the firm confirmed. The projection is based on gross interest and non-interest income, accounting for income from the old Harrods Bank operations as well as fees and interest from Tandem’s credit cards and savings businesses, both of which were only launched in the first half of this year.
Tandem earlier this year bought fintech app Pariti in a bid to boost its software capabilities.
Ricky Knox, Tandem chief executive, said: “2017 was a transformative year for Tandem, and 2018 has been no different. We are in an incredibly strong position and continue to target massive growth. We set out to solve real people’s problems with money and this year we’ve been able to do just that.”
The former Harrods Bank, now known as Tandem Bank Limited, reported losses of £10.7m in 2017, although Tandem said these are mostly related to costs which will not recur after it closed many of the former Harrods Bank business lines such as business current accounts.
Tandem Money incurred £7.7m of staff costs in 2017, down marginally from the previous year. It also spent £12.9m on software development by a Polish team which is employed through a separate company.