16th July 2019
Tandem announces UK's first crowd-designed mortgage
Today Tandem Bank announces it is developing a new mortgage product, suited to aspiring home-owners. In a first for the UK banking industry, Tandem wants consumers to feed into the process, sharing their personal must-haves for a mortgage by signing up to be part of a new group of co-creators.
Tandem plans to feed this input into the design phase of the mortgage, ensuring that the new product services a real consumer need. This will then be tested with a small group of customers by the end of 2019 before a full UK launch in 2020.
Part of this new mortgage offer will be a fresh approach to identifying trustworthy borrowers. Enabled by Open Banking, Tandem is developing a new method of credit scoring based on a customer’s aggregated financial data, effectively building a more rounded picture of how they borrow, spend and save through its advanced banking app. This will allow Tandem to offer mortgages to people who might not have been accepted by other lenders.
Nick Bennett, Chief Operating Officer at Tandem Bank, says, “Tandem is building a mortgage proposition that reflects the changes that are happening in the sector whilst challenging some of the established ways of doing things. We’re looking at new and intelligent ways of assessing whether a potential customer is creditworthy as well as ensuring our mortgage offering meets the needs of today’s consumers rather than taking a traditional approach. This is why we’re keen to have as much input as possible from the public on ways in which we can improve the current market offering”
The current system of credit bureau assessment has been criticised for punishing Brits who have made mistakes, or have thin credit files, with prohibitive rates on mortgages. People working on a freelance basis or as part of the gig economy are particularly vulnerable to rejection and unfavourable rates as they often lack a clear, regular source of income to share with lenders. Tandem is also looking to offer a range of different solutions to assist consumers wanting to get on the property ladder, including Help to Buy and Shared Ownership.
Meanwhile, banks have come under fire for failing to support existing mortgage-holders with competitive variable rates while offering attractive deals for new borrowers.
Ricky Knox, Tandem Bank Co-Founder and CEO, adds, “The mortgage sector in the UK is primed for a shake-up. It’s hard for most people to get on the property ladder and we want to help them embark on that journey with new tech and a customer-first approach to design.”