Last month Sky News reported that the Royal Bank of Scotland (RBS) is planning to establish a digital bank that will be run separately from its existing business.
The report said that former RBS COO Mark Bailie is leading the project and that tens of millions of pounds have been allocated to the new digital platform, which might not result in a new company being created.
In a statement at the time of the Sky report RBS said: “Our industry is changing rapidly and therefore we need to keep pace with this by launching new approaches to better serve our customers. We will not comment on media speculation, but we are focused on using automation and technology to deliver a more efficient banking experience that better reflects the changing way our customers now bank.”
Forbes has now put a little but more meat on this bone of a story and it appears the bank plans to migrate about a million customers from NatWest to the new bank.
Here are some of the bank’s plans for the new digital bank, according to Forbes: RBS aims to move 1 million NatWest customers onto its new mobile bank, it believes it can make “significant” per-customer cost savings versus NatWest, a “beta” of the RBS mobile bank is on target for the third quarter if this year, and rather than lending, its business model will be a marketplace to help customers switch and save.
Traditional banks are looking at ways to keep pace with the fintech revolution that is going on around them. Setting up a new standalone is one strategy, which has already been done by Virgin Money.
It has developed a digital bank to emulate the customer-centric offerings of the digital challengers, which also enjoy lower operating costs. Virgin Money has spent more than £38m to develop a digital banking platform, which it said will harness data to offer customers personalised accounts.
But state owned RBS is a much bigger fish with a broad business. It is already investing in digital transformation and recently announced – alongside its first profit in a decade – that its active mobile banking customers now total 5.5 million, outnumbering users of online banking for the first time.