Strategy, Growth, and Future of Tandem Bank: Can the Challenger Bank make the Most of the Open Banking System?

Strategy, Growth, and Future of Tandem Bank: Can the Challenger Bank make the Most of the Open Banking System?
Case Code: FINC182
Case Length: 9 Pages
Period: 2015-2019
Pub Date: 2021
Teaching Note: Available
Price: Rs.400
Organization: Tandem Bank
Industry: -
Countries: United Kingdom
Themes: Banks and Banking, Financial Institutions
Strategy, Growth, and Future of Tandem Bank: Can the Challenger Bank make the Most of the Open Banking System?
Abstract Case Intro 1 Case Intro 2 Excerpts


Licensing Obstacles

Challenger banks had two options to take off with their services. They either had to obtain a charter license or they could, in a simpler approach, secure an e-money license. The charter license allowed a challenger bank to offer a wide array of services like any conventional bank. The process of securing an e-money license was faster and easier, and cost effective, though the scope of services allowed to be offered by a bank with an e-money license was restricted...

Back to Square One

In March 2017, Tandem was stunned by an unexpected and untoward development. Sanpower pulled back on its remaining investment of £ 29 million. This was a politico-economic development. Chinese authorities were learnt to have imposed restrictions on outbound investments. The move was to curb capital outflows, as those were exerting downward pressure on the Chinese currency. According to Tandem, Sanpower pulled out due to "uncertainty about whether China's State Administration of Foreign Exchange would approve the transaction."...

Towards Growth – Harrod's Acquisition

Events at the beginning of 2018 breathed new life into Tandem. The year began with Tandem acquiring Harrods Bank. Harrods Bank was the banking arm of Harrods, a luxury department store owned by Qatar Investment Authority (QIA), Qatar's national wealth fund. Formed in 1893, Harrods Bank had its own independent banking license and was involved in savings, mortgages, and bullion and money transfers...

Product Strategy

When the Harrods’ Bank acquisition was made, Tandem had still rolled out only the app that offered customers a consolidated view of their finances that helped them in saving, organizing, and investing their money in a better manner. It had in the pipeline several other competitive savings products, which it rolled out throughout 2018...


January 2019 marked the introduction of open banking legislation, which compelled the traditional banks to share customer details with rival banks. That was the move which opened the floodgates to challenger banks like Tandem. Through 2018, Tandem witnessed growth in its customer base, alongside its product launches...

Road Ahead

Looking at the growing popularity of the challenger banks, the support of the regulators, and the growing customer-and user bases, it was pretty clear to Knox that challenger banks were here to stay and transform the future of banking. Tandem had impressed investors, customers, and analysts with its future prospects. Given its innovative products, and the strategic intent to cause financial good to its customers, Tandem was rated high both on its execution capabilities and its market potential...


Exhibit I: Features of Convention Banks Compared to Challenger Bank
Exhibit II : Challenger Bank Positioning

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