Long reads

How digital banks’ legal departments weathered the Covid-19 storm

Paige McNamee

Paige McNamee

Senior Reporter, Finextra

With digital platforms, smaller teams, and often cloud-based infrastructure, it seems that fresh-faced fintech banks weathered the Covid-19 storm better than their incumbent counterparts.

More specifically, their legal departments did.

According to a 2020 report by PwC, 62% of legal executives are very or moderately concerned about how major disruptions to day-to-day business demands caused by Covid-19 could affect operations. The rapid shift to online saw digital transactions soar and banks looking to capture the opportunity (not to mention their obligation to remain accessible for customers) realised that this resilience would only be found in enhancing their tech infrastructure.

This pressure to enhance technological infrastructure, reduce costs and reassess the fundamental structure of operating models are just a handful of reasons why legal teams in traditional institutions found the transition more challenging than fully digital neobanks.

Though lawyers are typically considered to be those most cautious around change, our conversations with the legal teams at 86 400 and Tandem Bank suggest that we shouldn’t be painting all legal professionals with the same brush.

Using a variety of tech solutions and a flexible approach to legal workflows, legal departments within neobanks have not just survived, but thrived after being forced into remote working during the pandemic.

Ed Freeman, General Counsel and Company Secretary at Tandem Bank, explains that it was in fact customer service, treasury, and banking operations teams which needed to take additional steps to make sure that they were working from home in a secure manner.

Freeman furthers that the neobank’s legal team was in fact always set up for remote working, “right from the start, this was just an extended business continuity event. It just happens that this has become a permanent way of life.”

Sharing a similar experience, general counsel and company secretary of Australian neobank 86 400, Christina Seppelt says the bank has been “absolutely blessed that we are a young company and are purpose-built.

“We’ve been perfectly structured for a pandemic. We operate purely through the cloud which gave us an advantage from the start, allowing us to operate remotely with no additional security risk.”

Does a small legal team help or hinder the remote working transition?

Entirely digital from their moment of conception, both neobanks’ systems are intrinsically agile. As a result, the transition has been a much smaller undertaking (and therefore less risky) compared to competitors who were forced into remote working under time pressure and with perhaps inadequate solutions.

With a team consisting of just two, it would be difficult to find a leaner legal department than Tandem’s, but the agile approach appears to be working very much in their favour. While Freeman and legal counsel Maxwell Smith form the bank’s two-man show, the pair explain that Tandem works predominantly with Herbert Smith Freehills and gets specialist advice from Eversheds, Walker Morris, Capital Law and Baker McKenzie for their legal needs.

Seppelt says she has heard whispers that other financial institutions are experiencing issues with employees using their PCs from home, without adequate security systems.

“Employees at some large financial institutions didn’t have resources at hand for staff to take home company PCs, which meant that staff were using their personal PCs to login to work systems. This isn’t something we had to deal with.”

What cyber threats have emerged?

According to Smith, Tandem’s Head of Information Security, Inga Schorno, has observed a few trends emerge in the industry over the past six to 12 months. First, she notes that targeted phishing attacks have increased as it preys on people’s emotions during the instability of Covid-19.

Tandem is conscious of this and “while we’ve always had strong security protocols in place to deal with these elements, ensuring that we have adequate ongoing training within the business for increased awareness and alertness is vital. Having effective malware, antivirus and endpoint protection solutions in place is also an absolute must.”

While Smith adds that this threat has not presented any increased risk to Tandem, it is simply something the bank has observed while working in this environment. An increased focus on data protection is also very important for companies. He says that given the transition to a permanent remote working set up, Tandem continues to follow best practices to ensure its data protection obligations are met as employees continue to carry out their work in unsupervised home environments.

“It’s crucial to apply strong access management, with well-defined limits on who can access sensitive and confidential data/documents, enable data loss prevention controls, and mature security monitoring solutions, to ensure that all these risks are mitigated.”

He adds that Tandem hasn’t seen any increase in data protection requests or complaints from customers.

A bittersweet departure from the watercooler chat?

Tandem has not seen any drop in performance during lockdown, in fact, Freeman believes the general efficiency across the business has gone up during the pandemic. While efficiency may have increased, the unique workplace culture has been challenged.

This effect presents a double-edged sword he believes, given the significant impact remote work has had on workplace culture. “The big challenge was maintaining our culture, which required us to think creatively and rapidly. We adapted many of our Tandem traditions so they worked effectively remotely whilst adopting new ways to build connectedness with both our mission and our teammates to preserve the things that are unique and so special about life at Tandem.”

Smith adds that up until March 2020 he was sat less than two meters away from Freeman every day, “and if I had a simple, easy, question, I could just put my head over the cubicle and ask him. Or, if we needed a quick answer from our busy CEO, you could generally catch some advice on his way to a meeting room.

“There has clearly been some adaptation required and we needed to find effective means of collaborating over applications such as Whatsapp, Slack, Zoom or Asana to keep relationships in good order.”

Conversely, Seppelt sees remote working as having created something of a bonding exercise. “In the office everyone is frantically busy, we’re a small team and there is a lot going on and happening quickly, then suddenly you’re zooming into people’s private lives.”

“You’re seeing their knickknacks and kids flying through Zoom calls or playing with dogs. You actually see people rather than the machines working next to you in the office, which I think is actually an upside rather than remote working being a killer to human interaction.”

Remote working is more than a workplace culture challenge

Despite the ease of transition, Seppelt explains that the approach to legal work evolved as a result of remote working during the pandemic.

As is the case in any fast-paced organisation, she says that the changes and projects are constant. 86 400 works on a two-week sprint, with its development team constantly coming up with ideas to put into production, working remotely tends to separate the legal team from this action.

“For legal, being able to pinpoint concerns early in these watercooler discussions and the development cycle is really important. Otherwise, they progress to the point where they’re at the end of their two-week sprint and are trying to put something live out to production when I have to put the legal handbrake on.”

Not being able to walk around the floor and hear this chitter chatter is a challenge. To tackle it however the team relies on a number of technologies such as Atlassian’s Jira for high-level developer roadmap tasks, Confluence for compliance audit trails and of course the Slack/Zoom/Teams calls to keep communication lines open constantly.  

Seppelt also notes that the timing on implementing new solutions like these is relevant for security considerations. Raising Athena Board (since acquired by Ansarada) a portal solution targeted at streamlining meeting management, Seppelt says that the solutions 86 400 uses were already in play prior to the pandemic. Nothing was rushed into use when lockdowns were announced.

“Everything we source through a vendor is stress tested for security. We have a team that does this before we sign any vendor on board. Athena Board like any other vendor went through our IT security due diligence process, which is our standard for vendor onboarding.”

In a similar vein, Freeman continues that for he and Smith, much of the work historically would present itself on an ad hoc basis, with people turning up at their desk and asking for help with a specific contract for instance. “It’s been tricky to manage that.”

True to its agile form, Tandem set up a legal intake process using the Slack workflow tool as a means for anyone in the business to approach the legal channel and input their request. This is linked to Asana which automatically creates a new task, it then adds a new row to an ongoing Google spreadsheet which tracks all matters, before assigning the task, considering timelines, and prioritising the task’s level of urgency.

As the company secretary, Freeman furthers that Tandem has been undertaking remote board meetings for over a year now and are about to put in place a board portal which is “a lot more professional for a board that was traditionally quite paper based.”

How are Tandem Bank and 86 400 oriented for 2021?

Though Tandem’s ‘material uncertainty’ announcement hit headlines in January, this is effectively routine for startups, neobanks, and fintechs, says Freeman.

The general counsel points to the £60 million funding round in August 2020 and the acquisition of green lending business Allium which appears to be aligning the digital bank with an overall ‘green’ profile. Founder and CEO Ricky Knox recently said that Tandem was founded with the number one intent of building ‘The Good Bank’.

More significant change is on the horizon for 86 400, which last month announced it is set to be acquired by National Australia Bank (NAB), one of the country’s ‘Big 4’ banks. At the time the neobank’s CEO Robert Bell said “86 400 and its customers will benefit from NAB’s capital and balance sheet strength and investment spend to support accelerated growth and continued innovation.”


Revolut’s recent announcement of permanent remote working is likely a bell-weather event for financial services, no more so than for neo and challenger banks which have shown their temerity for adaptation throughout the pandemic.

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