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THE BIG INTERVIEW
Takeovers, trials and tribulations – how to become the UK’s largest challenger bank
It’s been an eventful time for Tandem Bank since CEO and founder Ricky Knox last featured in IBS Journal. From multi-millions lost on the eve of launch, the bank has experienced a phoenix-like resurrection with the acquisition of ailing Harrods Bank. Alex Hamilton visited the Tandem HQ to find out more
Senior Fintech Reporter Alex Hamilton
I
t has been two years since we were last in the Tandem offices, which are bedecked in sticky notes, strewn with open-plan desks and abuzz with the excited murmuring you’d find at
any startup in London. When we last met Ricky Knox, back in 2016, there was something of a parallel – a fresh-faced fintech reporter undertaking his first major interview, and a fresh-faced bank ready to take on the industry.
The two years since then have certainly been a lively period for Tandem. The bank originally planned a 2017 launch, but instead saw Sanpower, a major investor, back out at the eleventh hour. The Chinese firm, which owns UK department store House of Fraser, was concerned about new government regulations restricting investment overseas – $37.5 million went with it. Tandem was forced to cut staff, reducing from 110 to about 80 employees.
Later that year, though, an opportunity landed in Knox’s lap: the owners of Harrods Bank, Qatar Holdings, offered him the chance of acquiring the ageing institution. The bank, which is more than 100 years old, made a loss of £8.4 million in 2016. The new deal granted Tandem a full banking licence, as well as access to Harrods Bank customers and £80 million ($108 million) of capital. The challenger also gained a £375 million mortgage book and more than £400 million in deposits.
I ask Knox just exactly how it feels, to go from such relative lows to becoming (arguably) the UK’s largest challenger bank. “Well, to answer it simply, it feels great,” he says, with a chuckle. “On 31 March, when House of Fraser came in and said that they would have
to pull out of the deal – which they had signed and paid the first £6 million of – was in the top three worst days of my career.”
Once the initial shock was over, says Knox, Tandem reacted straight away. It had to make a change to its focus, since at the time it had been on the eve of a major launch. After spending so much time on building the bank and the companion app around savings, the sudden lack of a banking licence meant it was something it just couldn’t do anymore.
“We had to completely shelve our savings account plans and move forward with our credit card plans,” says Knox. Following the Harrods deal, Tandem is getting everything back into gear, and plans to launch its savings accounts in the very near future.
“It was a pretty wholesale 180-degree turn,” adds Knox, imitating the screech of tires to demonstrate his point. It wasn’t sink or swim, though. Tandem had at least “four or five” other bidders hoping to get on board, though Knox told them to hold fire for the time being. It was in June 2017 that the owners of Harrods turned up at the Tandem offices, offering up their banking assets. “To begin with I said: ‘you must be crazy?’,” he says. “Harrods Bank sounded old, manual and full of rich-guy customers. We weren’t targeting any of these things.”
An old dog worth new tricks
After discussions had gone a little further, though, Knox began to see the potential of the Harrods buyout. “It was a bank that didn’t have a
www.ibsintelligence.com | © IBS Intelligence 2018
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