Banks, DealsMay 12, 2016June 5, 2016

Digital challenger bank Tandem smashes crowdfunding target in minutes

By Lynsey Barber for CityAM

Another digital challenger bank has smashed its crowdfunding target within minutes as investors continue to clamour for an opportunity in fintech – and it hasn’t even launched yet.

Tandem has raised £1m in just 20 minutes through crowdfunding platform Seedrs.

The fundraising was open to those who pre-registered from 12pm today and having already reached its target, the bank is now considering whether a second raise planned for Friday and open to all should go ahead, sources told City A.M..

The high demand from pre-registered investors led to a “momentary glitch” on the Seedrs site. The raise follows huge interest in fellow digital challenger bank Mondo, which last month hit its £1m target on Crowdcube in just 96 seconds, and experienced its own technical issues due to the surge in interest.

Tandem was granted a banking licence at the end of 2015 and plans to launch by the end of this year. It boasts high profile executives formerly of Santander and Williams & Glyn on its board.

Alongside Mondo, Atom is among the challenger banks which also plan to disrupt the big high street banks with a focus on banking by app to attract users more used to using a smartphone than popping into their local branch.

Atom, which opened for business in April, is backed by Neil Woodford and Spanish bank BBVA.

Tandem revealed ahead of the crowdfunding that it has so far raised £22m from investors such as eBay founder Pierre Omidyar and several Silicon Valley venture capital firms.

The popularity of challenger bank crowdfunding indicates the public’s far from fondness for high street banks.

“For so long banks were able to rely on current account customers for life. The financial crisis and the plethora of information in all sectors means people feel no great loyalty to the banks and are now used to shopping around for a better deals in everything from groceries to clothes and expect to be rewarded – with marginal interest rates and product offers for the high street banks, they are willing to support those that might be able to offer an alternative,” said deputy head of policy at the Institute of Directors.

“Whether challenger banks will be able to do that is a different matter, but with so little perceived innovation and differentiation in traditional banking, supporters want to at least help them to try and do it,” he added.

First appeared at CityAM