Digital bank Tandem has agreed to buy fellow British fintech group Pariti, as it looks to head off rising competition from established lenders taking advantage of new legislation that gives them greater access to customer data.
New rules that came into force in January allow companies such as Tandem and Pariti to access customer data from other lenders if the individuals give consent. The change is designed to allow alternative providers to offer more tailored financial services, boosting competition in the sector which is currently dominated by a small number of big banks.
Pariti aggregates data from across customers’ different bank accounts and credit cards, and offers free savings tools as well as loans provided through partnerships with peer to peer lenders like Zopa.
Matthew Ford, Pariti chief executive, said the combination with Tandem was a “natural” fit, adding that the two companies started with “almost an identical mission”.
The consolidation comes as big banks attempt to catch up with and overtake smaller fintech groups with their own improved digital services. Earlier this week the FT reported that HSBC will launch its own aggregator app as early as next month.
Pariti had previously partnered with HSBC on a precursor to its upcoming app, and Mr Ford said he “absolutely” saw the impact of rising competition in the market. However, he added that “my view is that innovation can’t come out of a very large bank — you need the start-up mentality, you need to be coming at it from a new challenger angle . . . that’s why joining Tandem just made perfect sense”.
Mr Ford, along with Pariti chief technology officer Peter Townsend, will join Tandem’s senior team after the deal is completed.
Tandem has been the most acquisitive of the UK’s new batch of digital-focused banks, having last year also purchased the banking business of Harrods department store.
It has also moved into credit card lending and aims to launch fixed-term savings accounts in the coming months. However, its latest set of financial results highlighted Tandem’s need to secure further funding to support its operations this year.
Ricky Knox, Tandem chief executive, said: “We’re thrilled to have the team from Pariti on board. Both Matthew and Peter are incredibly talented guys who will be able to contribute to our banking app from day one. Pariti was leading the pack when it came to account aggregation and acquiring this app will give a boost to our already advanced offering.”
Tandem and Pariti did not reveal the financial terms of the deal.