Disruption continues to threaten traditional players in the banking industry as challenger banks begin to dominate the financial stage and digital retail banks, such as Tandem, are granted banking licences.
Founded by Ricky Knox, founder of Azimo and Matt Cooper, co-founder of Capital One, Tandem has been granted authorisation by the Bank of England to operate and will now be regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Knox comments on how Tandem’s vision for retail banking is to “build a good bank” and to take advantage of the digitalisation of the banking industry. “For too long, traditional banks have made money at their customers’ expense. We want to build a bank that challenges this model by putting our customers’ interests first,” Knox explained.
The next step for Tandem is to develop their technology platform to be able to offer services online. Alongside this, new recruits such as Michael Amato, a non-executive member of Santander UK, joined the Tandem board this month.
The emergence of new banks has grown rapidly since the launch of Metro Bank in London in 2010 and recently, rival Atom Bank was also granted a license and Spanish bank BBVA invested £45 million into the mobile-only bank.
Metro Bank was the first new retail bank in the UK for 150 years, CityAM explores, but there are currently around 20 banks in the pre-application stage with the Bank of England for authorisation for high street lending.
As a new player, Tandem will not be a member of the mass market, but will focus on mobile and internet based services market, Anthony Duffy, director of retail banking, UK & Ireland at Fujitsu, explained. “Tandem is the latest of a growing list of new entrants to the retail banking market. It should be welcomed, as innovation in this sector is being driven by these new and adventurous organisations. Seeing how the new entrants progress is making retail banking a very interesting market to watch.”
According to CityAM, the UK government intends on bringing 15 new banks to the high street before 2020, despite little progress being made on the account switching front, as the government have been pressuring the high street banking market to become more competitive.
2016 could see the introduction of a new price comparison tool for the high street banking industry, following on from earlier this year when the Competition and Markets Authority ruled out ending free if in-credit banking, CityAM reported.