Royal Bank of Scotland’s standalone digital bank has invested in a fintech that offers a money management tool for young people and students.
RBS is currently building a digital bank, known as Bó, which will be separate from the main bank. News of which first broke in March last year. The investment in the fintech, knoown as, Loot might help it attract younger customers, amid fierce competition.
Former RBS COO Mark Bailie is leading the Bó project which has seen tens of millions of pounds allocated to the new digital platform.
Reports suggested the bank will migrate about a million customers from its NatWest arm to the new bank. It plans to launch this year and is currently in private beta.
News now comes that the digital bank has taken a 25% stake in Loot, which offers students and young people a money management tool. The app as about 175,000 people signed up to it.
RBS, like other banks, are investing in fintechs to give them access to innovation and customers that might not normally chose them, mainly the young.
Bailie at Bó, said: “Through [Loot’s] innovative use of technology and intention to change the status quo, it’s quickly built a following of loyal customers, with potential for rapid future growth.”
It will be interesting to see how RBS migrates NatWest customers to Bó. And if successful how many other customers move to the digital bank.
Clydesdale and Yorkshire bank group (CYBG) may have a good model that RBS could follow.
CYBG created a separate bank known a B. Yes B will be competing with Bó. CYBG built the digital bank and then migrated its Clydesdale bank and Yorkshire bank customers to it. The CYBG announced it was acquiring Virgin Money, which means another group of customers will move to B.
CYBG has completed the transfer of customers to B and I didn’t note any reports of any problems. This is interesting if you consider the carnage experienced at TSB when it moved customers to a new platform.
Read my interview with CYBG CIO Fraser Ingram about the migration.