The Royal Bank of Scotland has become the first of the UK’s “Big Four” banks to launch a standalone digital-only bank. Under the new name, Mettle, the new bank will operate separately to the wider Royal Bank of Scotland Group and is geared towards small and medium-sized enterprises.
The new bank and accounts will be managed through a new app similar to the system put in place by similar challenger banks who are attempting to keep overheads down.
The potential uptake of the new bank, however, remains to be seen given RBS’s history with SME customers. As many will be aware, the bank was mired in controversy when its turnaround division, the Global Restructuring Group (GRG), faced accusations of having intentionally distressed and asset stripped customers in order to generate increased revenue following its bailout by the UK government.
The accusations were subject to investigations by the Financial Conduct Authority with the well-known Promontory Report being published in February of this year following a leak. Although the review scheme established by RBS for those affected closed its doors to new complaints from 22nd October 2018, the legacy of the GRG conduct is still likely to leave some customers unwilling to take the risk, regardless of how separate Mettle is from RBS.
It is this historic breach of trust for customers that is likely to lead many to look elsewhere. Speaking publicly in October, RBS Chief Executive, Ross McEwan, stated his belief that for the bank it could “take five – maybe even 10 – years to rebuild trust to where we’d want it to be”.
Regardless of RBS’s attempts to convince SME customers to come back, it is entering an already very competitive area that is already dominated by a number of new challenger banks. RBS also faces the challenge of competing with other banks which it will be required to provide £775 million pounds worth of funds to under its bailout agreement.
If you have been affected by banking misconduct, then we are here to help. Seneca Banking Consultants are experts in the field, having recovered over £100 million in compensation for small and medium-sized enterprises. Please feel free to get in touch for a no obligation discussion on 01204 322 805.