One of Britain’s largest banks, the giant £32bn Royal Bank of Scotland, is feverishly building a new mobile-only bank, which Forbes can exclusively reveal details about.
The development is in response to challenger rivals like Monzo and Revolut and is expected to be the largest new banking brand from Britain’s “big four” since HSBC launched its telebank First Direct in 1989.
As a sign of just how serious it is about the project, RBS has set an internal target of switching 1 million of its existing NatWest customers onto its mobile-only offering, a person with knowledge of the plans told Forbes.
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Ross McEwan, CEO of the Royal Bank of Scotland Group, pictured, has reportedly put chief operating officer Mark Bailie in charge of the digital bank project. Credit: Jason Alden/Bloomberg.
Lean, mean, banking machine
The ambitious target comes as challenger banks like Starling and Monzo collectively scoop up hundreds of thousands of current account customers, while boasting huge cost-savings versus their high street counterparts.
RBS, which remains part-owned by the British public following its bailout during the financial crisis, believes it can make “significant” per-customer cost savings with a new mobile bank, versus its more traditional NatWest banking arm.
One of those savings is already appearing from the development of the bank, which is being built by a lean team of just 80 developers and bankers—purposefully based in Piccadilly away from the corporate London headquarters of RBS in Bishopsgate, for reasons of secrecy and culture.
While development of the bank and its launch timeline is still in flux, RBS is also aiming to launch a “beta” in the third quarter of 2018, although it’s unclear whether this will be open to the public or not.
RBS is responding to competition from the likes of Monzo and Starling Bank.
A different kind of bank
Surprisingly, RBS is also considering a "marketplace" business model for the new bank, where it will earn commissions by helping its customers to save by switching to financial products provided both by RBS and also other smaller fintech players across the industry.
It’s a model similar to that first advocated by challenger bank Tandem, before it ran into financial difficulties in 2017.
As opposed to startups Monzo and Revolut, which tend to appeal to a more financially-savvy millennial audience, RBS will instead target its less financially literate NatWest customer base who often struggle to make ends meet at the end of the month.
“Our industry is changing rapidly and therefore we need to keep pace with this by launching new approaches to better serve our customers," a spokesperson for RBS told Forbes.
"We will not comment on media speculation, but we’re focussed on using automation and technology to deliver a more efficient banking experience that better reflects the changing way our customers now bank.”
– RBS aims to move 1 million NatWest customers onto its new mobile bank, – The banking giant believes it can make “significant” per-customer cost savings versus NatWest, – A “beta” of the RBS mobile bank is on target for Q3, but it’s unclear whether this will be open to the public, – Rather than lending, its business model will be a marketplace to help customers switch and save.
