The state-backed Royal Bank of Scotland (RBS) is to unveil a standalone consumer digital lender called Bó as it plots a fightback against the technology “unicorns” which are threatening to poach millions of customers from their high street rivals.
Sky News can exclusively reveal that RBS has settled on the name Bó to spearhead a new banking platform that some analysts believe could be the most important launch since First Direct was created by HSBC in the late 1980s.
Approximately 100 RBS staff working on the project were briefed on the name on Thursday, according to insiders.
The new venture is being spearheaded by Mark Bailie, RBS’s former chief operating officer.
Bó is slated to launch to the public next year, with RBS executives said to want to migrate one million NatWest customers to the new platform, which will only be accessible on mobile devices.
Other details of Bó remain sketchy, although one insider who was briefed on the initiative said it would aim to harness artificial intelligence and big data techniques to help customers manage their financial affairs more efficiently.
In April, Forbes magazine reported that the new platform could operate as a marketplace through which RBS would earn commission from encouraging customers to switch to more appropriate financial products.
The reason for calling the new lender Bó are unclear, although one source said that it meant “to live” in Danish.
Sky News first revealed that RBS was working on the plan for a new digital lender in March.
Executives from the big five high street banks are increasingly turning their attention to the technologically advanced propositions being developed by the likes of Monzo, Revolut and N26, the German-based fintech group which is aiming to launch in the UK within weeks.
All three of those companies, as well as Zopa, have raised money at premium valuations this year.
An RBS spokeswoman said on Thursday: “As part of the bank’s wider investment in digital and innovation, RBS is working on a range of projects to better serve our customers in the era of digital and open banking.
“One of the projects we are looking at is building a separate, digital-only bank for personal customers.”
The timing of the briefing to staff is particularly pointed because it came on the same day that Goldman Sachs, the Wall Street investment bank, launched Marcus, its retail offering, in the UK with a market-leading interest rate for savers.
The need to develop new technology-led services for customers has also been highlighted by a long-running series of IT and systems problems which have plagued the major high street players.
Only last week, RBS was among several banks hit by further technical failures which left millions of users locked out of their accounts.
The growing emphasis on digital channels, which traditional banks insist is essential as footfall across their branch networks declines sharply, is nevertheless not without other risks.
This week, Sky News revealed that Tesco Bank had been threatened with a record £30m fine by the City regulator over a cyber-assault in 2016, despite the fact that fewer than 50 of its customers had money temporarily removed from their accounts.
Nevertheless, the development of the Bó brand is seen within RBS as a further sign of the bank’s renewed confidence following its first annual profit in a decade.
The bank has now overcome most of the legacy issues which have plagued it since the era of Fred Goodwin, its former chief executive, and its £45.5bn bailout in 2008.
RBS has already struck agreements with a number of leading fintech companies such as Funding Circle, with which it works to direct customers to peer-to-peer and other providers of alternative finance.
The financial advantages enjoyed by digital lenders are hastening the closure of high street branches – a subject which continues to draw political opprobrium from critics of Britain’s five biggest lenders: Barclays, HSBC, Lloyds Banking Group, RBS and Santander UK.