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Royal Bank of Scotland to launch digital bank for SMEs

Royal Bank of Scotland has become the first of the UK’s big high street lenders to open a standalone digital bank, with the launch of a new business-focused current account that will be run independently of its traditional brands. The new bank, called Mettle, is designed for small business customers, and will provide a current account alongside services such as invoicing and cash flow forecasting.

Alison Rose, RBS head of commercial and private banking, said the new brand was designed to give customers “a different choice” about how to bank as new technology changes the behaviour and priorities of many small businesses.

“The main challenge facing all banks right now is how we shift from physical to digital, so what we’re trying to do with this is respond to customers telling us how they want to interact,”

she said.

Ms Rose said new features would be added over time in response to customer priorities, with its new platform allowing it to develop and deploy new products more quickly than in the past. Mettle is one of several standalone digital operations RBS has been working on in an effort to adapt to a rapidly-changing banking environment. The bank has prioritised technological investment since returning to profit last year, having spent much of the previous decade focusing on restructuring after its 2008 government bailout.

Customers will operate accounts through a mobile app, similar to new challengers such as Starling, which started offering business accounts earlier this year. Although Britain’s retail and small business banking market remains heavily concentrated, a number of new competitors have begun to make headway in recent years.

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SME-focused lender Funding Circle, for example, recently listed in one of the highest-profile London initial public offerings of 2018, while RBS’s high-street rival Barclays invested in peer-to-peer invoice finance provider MarketInvoice.

Recommended Lex RBS: fear and loaning Bankers are also concerned about the potential for more severe disruption as big tech groups such as Amazon and Facebook consider expanding into some parts of the banking system. Ross McEwan, RBS chief executive, told the FT last month that the bank was responding with a two-pronged strategy of modernising its existing IT systems while simultaneously experimenting with standalone products such as Mettle and Bó, a consumer-focused platform that is expected to launch next year.

Mettle will open to a limited number of customers in pilot mode from Tuesday, with additional businesses invited to register their interest to join as the programme expands. The decision to focus on SMEs for its first digital venture also highlights the bank’s efforts to improve its business banking services even as it is forced to spend £775m strengthening its rivals.

RBS is paying for a programme to boost competition in SME banking as a condition of its 2008 bailout. However, it has also taken several steps to hold on to its position as the country’s largest business lender. Earlier this year it launched an online corporate lender called Esme, and bought an Aim-listed accounting software business in its first acquisition since before the crisis. Last month it also pledged an extra £2bn to help small business customers deal with the impact of Brexit.

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Oliver Smith


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