IBS Journal March 2018
39
lot of technology, had a £400 million balance sheet and was making money. The lack of tech was holding it back and making it unfit for purpose.” It was time, says Knox, for the bank to find itself a new home. When he and Matt Cooper (chairman, non-executive director) looked at the products and services of Harrods, they realised that a lot of it could be ported across to fit under the Tandem umbrella. A healthy balance sheet, a few million in capital and a banking licence helped sway the decision, too, of course.
“We have accelerated nearly all of our projects [as a result of the acquisition]. Not only do we have going on half a billion in the balance sheet, our revenues make us one of the most profitable entities in the challenger space,” says Knox. “We’re in the process of moving up our waiting list, both for the app and for credit cards. There’s also going to be a big marketing splash soon, probably in the next quarter.”
How was reconciling Harrods Bank, one of the oldest in the country which traditionally serviced high-net-worth individuals, with the operating model at Tandem? According to Knox, the “private bank” label given to Harrods was something of a misnomer. “It had a very small base of mortgage customers who were on the high-end and big base of savings customers in the middle range,” he says. When it comes to liquidity strategies, Harrods was operating very similarly to Tandem.
“The vast majority of savings in the UK are held by people in their 50s and 60s and that makes up most of the bond market. It was somewhere we were planning to go for our liquidity anyway,” Knox
adds. Tandem has already got in contact with its new customer base to start cross-selling the app and its platforms. “Is that going to be an 80-90% fit for them?” he says. “Absolutely not, but that was never our plan going into this in the first place.”
When it comes to mortgages, Knox says that Tandem had always been planning to go down that route. “Since the acquisition, obviously that process has been accelerated for us, probably sooner than we initially planned, but we’re already working on renewal offers for existing customers.” A transition is in the works, too, for newer customers. Tandem is more than happy with its incoming mortgage base, though. “These individuals are in good credit, they’re of higher net worth than the average but we’re excited to welcoming them in.” Knox reveals that he’s been meeting with some of the more prominent names on the list, and that he’s had more hand-written letters than he ever expected.
Replacing engines
Tandem has been running Fiserv’s Agiliti system, though Knox adds that “a large chunk” of the platform is actually bespoke. He turns in his seat, pointing through the glass walls of the meeting room. “Pretty much every group here is from a technology background,” he says. “We’ve built a very large part of our platform, which is hosted via AWS.” Agiliti’s role, he adds, is mainly for the back end and for accounts.
Harrods Bank was a long-time user of Misys (now Finastra)’s Bankmaster core banking system. The bank was also midway
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