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Ricky Knox, CEO of Tandem Bank

UK challenger Tandem Bank has completed its purchase of Harrods Bank, following regulatory approval from the Bank of England’s Prudential Regulation Authority and the Financial Conduct Authority (FCA).

The deal grants Tandem Bank a full banking licence, as well as access to Harrods Bank customers and £80 million ($108 million) of capital. The challenger also gains a £375 million ($505 million) mortgage book and more than £400 million ($539 million) in deposits.

Tandem Bank is in the process of rolling out a travel card and cashback card, and plans some “competitive savings products” in 2018. CEO and co-founder Ricky Knox told IBS Intelligence in a 2015 interview that Tandem aimed to be “completely different” from other challengers on the market.

Tandem Bank previously had the backing of Chinese conglomerate and House of Fraser owner Sanpower. It had been planning to stump up £29 million ($39 million) to fund Tandem’s capital requirements.

Sanpower eventually pulled out of the deal, owing to increasing government clampdowns in China aimed at stopping capital outflows. The deal falling through caused the bank to slice its staff levels, from 110 to around 80. The reduction, according to Business Insider, includes both redundancies and contractors.

Related: Tandem opens early access to cashback credit card

Reports that Harrods owner Qatar Holdings was considering a sale of the more than century-old bank surfaced in early 2017. The bank had been suffering losses, with a pre-tax hit of £8.4 million ($11.3 million) in 2016.

The new acquisition propels Tandem up the maturity rankings, placing it amongst the most popular solutions on the market, including Monzo and Starling Bank. The challenger is sure to be undertaking a review of Harrods Bank’s product range and existing infrastructure.

Tandem is a current user of Fiserv’s Agiliti platform, having selected it in February 2016. Agiliti is delivered on a pay-as-you-grow model, meaning that new entrants which take the system will have lower start-up costs than those which buy hardware and licence software themselves.

“Building a good bank is incredibly important to us. And the acquisition of Harrods Bank means we can now confidently develop innovative services in line with our mission to make our customers’ lives richer,” said Knox. “With our new banking licence, our banking app and our fast growing range of services, 2018 is going to be a great year for Tandem”.

by Alex Hamilton
Alex is Senior Reporter at IBS Intelligence, follow him on Twitter or contact him at: alexanderh@ibsintelligence.com