Back from the dead: Britain has a new banking challenger

By Oliver Smith 8 August 2017
Tandem CEO Ricky Knox.

Tandem is back baby.

Remember Tandem?

The challenger bank started by serial entrepreneur Ricky Knox was basically written-off after a huge investment round from House of Fraser fell apart last year, and the Bank of England withdrew Tandem’s banking licence.

It was thought to be dead in the water, but after a surprise multi-million-pound acquisition of the banking division of luxury department store Harrods yesterday, suddenly Tandem has come roaring back to life.

The takeover of Harrods Bank brings Tandem a banking licence, a reported £80m in capital (partly from Harrods customer deposits) and a range of financial products like mortgages, current accounts and business accounts.

It’s also a bizarre, possibly desperate move by Tandem.

Image: Getty/chrisdorney.

By hook or by crook

In an email to its supporters, Tandem said the deal (if approved by regulators) would let it “accelerate our launch plans” and “ensure we can introduce as many people as possible to a new way of banking” with a note that current accounts would be coming soon.

It also notes that Harrods Bank will be rolled into the Tandem brand, which is where things get weird…

Harrods Bank was launched at the eponymous London store in 1893 and has, for nearly 125 years, catered for high-net-worth individuals offering services like gold bullion storage.

Now, these customers, who I imagine have never heard of Tandem or even know what a ‘challenger bank’ is, will find their beloved bank account taken over by a bunch of millennials…

At the same time Tandem, which should be laser-focused on launching a tech-savvy digital challenger bank now has the burden of managing a loss-making legacy bank, with a physical store and thousands of demanding customers.

Not exactly a match made in heaven.

But the Harrods takeover is a good outcome for the future of banking.

All bets are off

Tandem is now another challenger in what was fast becoming a two-horse race between Monzo and Starling.

And Tandem comes as a breath of fresh air – its original business model was far more unique than Starling or Monzo, focused on earning commission from helping its customers switch to more affordable financial services.

The race towards the future of banking is back on, and there’s a new challenger in the running.