Tandem Bank takes in £15m from Convoy in Hong Kong expansion

Fintech challenger bank Tandem has today closed a strategic partnership with Convoy Global Holdings, a Hong Kong-based financial services group which will make the London startup one of the first digital banks to launch in the city.

Convoy is investing an initial £15m into Tandem Bank as part of the deal, which will provide Tandem with access to Convoy's Asian customer base and Convoy with Tandem's technology.

The Hong Kong group is no stranger to UK fintech, already holding the largest stake in digital wealth management service Nutmeg and a separate investment in Ireland's Currencyfair. Convoy's head of venture capital, Michael Yap, said Tandem will collaborate on partnerships with the two firms as part of the agreement.

The move will see Tandem aim to disrupt the hold of incumbent lenders in Hong Kong, where the top four banks reign supreme with around 75 per cent of the market.

Tandem chief executive Ricky Knox said: "We see a powerful opportunity to significantly expand our presence in Asia, one of the most vibrant virtual banking markets, and begin the expansion of our banking services across the globe.

"The UK has been leading the virtual banking revolution and it is time to capitalise on the wave of changing regulation around the world – and improve more customers' lives with money."

The UK digital bank currently has more than 300,000 customers, and is growing after posting an annual revenue run rate of £15m.

Tandem Money, the parent company of the bank, reported total costs of £23.5m during 2017, up from £20.4m in 2016.

Tandem's race to profitability was complicated by its purchase last year of Harrods Bank, which allowed it to regain a banking licence and provided it with £80m of capital. It had been forced to give up its licence after Nanjing Cenbest, the owner of House of Fraser, reneged on earlier funding commitments.