UK digital bank Tandem given approval to begin operations

Digital challenger bank Tandem has received regulatory approval to begin offering digital financial services in the UK; the founders of the bank claim that its strengths are its digital and mobile capabilities, and they expect it to challenge the current high-street banks. Over the next year 29 new banks have submitted applications to offer services in the UK, indicating the growing pace of potential change in UK retail banking. Something these startups have in common is their lack of legacy IT infrastructure systems, which they claim will allow them to offer many of the same services offered by the traditional banks, but at far lower costs.

Banking startup Tandem has been cleared to offer digital financial services in the UK.

Tandem’s founders are pitching their bank as something that’s digital and mobile, and will challenge the high-street banking status quo.

It joins a growing list of startups with a small number of staff and who are promising traditional bank services through the end point of a smartphone.

Others include Atom Bank, Starling, Mondo, Secco and Civilized Bank. Last year, 29 new banks submitted applications to offer services in the UK. They must satisfy regulators at the Bank of England in order to operate.

Details of Tandem’s technology platform and data sauce are being kept secret. However, one thing Tandem – and the others – have in common is they are free of the kind of legacy IT infrastructure that’s both slowed down banking’s big names and proved their Achilles heel.

Tandem co-founder Ricky Knox, founder of money transfer service Azimo, claimed Tandem’s mobile experience will save customers a “substantial” amount of money each year.

“It will use big data and the latest mobile technology to proactively improve customers’ financial lives,” Knox blogged here. His bank’s planned mobile application help customers find attractive rates and services and pick other banks’ products “where appropriate,” he wrote.

In January Oracle announced new private bank Hampden & Co had picked Oracle’s Flexcube to provide its core banking platform.

Rather than buy its own IT infrastructure, Hampden decided instead to run its backend as a service hosted at an Oracle data centre – a 160,000 square foot facility in Linlithgow, Scotland. Flexcube is run on Oracle SPARC T5 servers at the centre.

Metro Bank, which opened for business in the UK in July 2010 and has plans for 200 branches by 2020, has outsourced its core banking platform, used to manage accounts and customer relationships, to “banking software systems” firm Temenos. ®