RBS: Bó’s closure highlights traditional banks’ digital deficit

News and opinion on finance

Bó, RBS’s digital bank for retail customers, announced in early May it was to close after just six months in business, with only 11,000 customers.

RBS’s digital bank for businesses, Mettle, will continue to operate.

Digital solutions are thriving as more people are forced to work from home.

In March, Skype saw a 220% increase in Skype-to-Skype calls, with 40 million active users each day, and Zoom boasted 200 million active users per day – up from 10 million just a month before.

It’s a similar pattern when it comes to banking.

Research by fintech company Nucoro shows that between March 14 and April 14, 12% of the adult population in the UK – around six million people – downloaded their bank’s mobile app for the first time to access their financial information amid the coronavirus lockdown.


So why did Bó fail?

Creating a digital-only bank from a parent firm weighed down with legacy problems – no matter how tech savvy the bank may claim to be – was always going to be a challenge, particularly when faced with well-established and effective competition.

Customers are finding that there are stark differences between banks with digital capacity – digitized banks – and digital natives. The former may have an app that can be downloaded but may still require its customers to visit a physical branch to apply for a loan or a mortgage.

The latter, fintechs at their core, are leveraging digital solutions such as open banking and APIs as a matter of course. They will allow customers to bank remotely – essential, given the current situation.

In the months to come, banks such as Monzo, Revolut, Starling, N26 and others will likely pick up more new customers thanks to their ability to maintain business as usual.

No matter how tech savvy traditional banks are, they will always struggle to mimic their digital peers.