Bob Diamond's private equity firm is eyeing up digital challenger Tandem

Bob Diamond is the latest City veteran looking for a slice of the digital fintech revolution with the former boss of Barclays eyeing a potential investment of online challenger bank Tandem.

The banker's private equity firm Atlas Merchant Capital (AMC) is mulling an investment in the fintech startup, Sky News reports, as it seeks to regain its banking licence and kickstart its launch plans in the face of growing competition.

Tandem snapped up Harrods Bank earlier this year, City A.M. exclusively disclosed. It lost its permission to be called a bank after House of Fraser owner Sanpower pulled its funding, also first revealed by City A.M., which resulted in it losing its banking licence.

The deal for the lending part of the luxury Knightsbridge retailer is expected to bring with it fresh permission - and capital - to operate as a bank.

Tandem has not yet responded to a request for comment.

The lure of fintech for private equity firms is growing, with $4bn already invested into the sector across Europe in the first three quarters of the year, up from $3bn in all of 2016 according to KPMG's Pulse of Fintech report.

Rival digital challenger bank Monzo last month raised £71m while Starling is seeking to close a £40m funding round by the end of next June with operations as a fully licensed bank requiring higher amounts of capital than that of other fintech startups.

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