RBS kicks off wave of digital bank offshoots


Dominic O’Neill
Published on:

Mettle starts digital-bank spawn from leading UK lenders; new IT system to enable more user-friendly design.


Some of Britain’s biggest banks are launching a slew of new standalone online banks, as they experiment with new technology and brands, and try to thwart digital challengers.

Royal Bank of Scotland’s Mettle, launched on November 6, will be one of the first in this trend, focusing on small businesses. Through Mettle, RBS aims to offer mobile phone-based means of managing invoices and expenses, initially targeting micro-enterprises, including busy sole traders.

“Starting from scratch allows us to build a modern current account, with lots of interesting features,” says Andrew Ellis, head of strategy and innovation for commercial and private banking at RBS. “We will help customers look forward and forecast their cash-flow needs.”

RBS is not the only bank trying out something like this.

Santander, according to a source at the bank, is in the early stages of preparing its own separately branded online banking platform for its UK business clients. And HSBC is preparing a new digital-banking platform known as Project Iceberg for business customers, although Euromoney understands it will not have a separate brand.

Next year, RBS also plans to launch Bó, a new mobile-only retail bank, managed by chief operating officer Mark Bailie. RBS hopes to transfer around a million retail clients to Bó, Sky News reported in September.

A UK launch of Openbank – Santander’s online-only retail bank, recently relaunched in Spain – could follow. The Spanish bank’s outgoing global chief executive José Antonio Álvarez described Openbank’s international ambitions to Euromoney earlier this year, potentially including the UK.

Clydesdale Bank was an earlier mover in UK banking’s new enthusiasm for digital offshoots, launching its version for retail customers – called simply B – two years ago.

Its takeover of Virgin Money will now see B subsumed in the Virgin brand, which it will use for retail customers and possibly small and medium-sized enterprises (SMEs), although the merger looks set to end the preparations Virgin was making for its new digital-banking platform.

Core-banking speedboats

These British initiatives, including RBS’s efforts, are in line with strategies across Europe to deploy what senior executives think of as front-office sandboxes, or core-banking speedboats, to the main bank’s super-tanker.

CaixaBank’s imaginBank and Commerzbank’s Comdirect, as well as Openbank, all say their online-only banks serve this kind of function.

Like Openbank, Mettle will have a separate back office, making use of cloud computing. At the same time, it shares staff with RBS, which could make it easier to share skills and transfer some of the front-office features to NatWest, RBS’s main brand.

There is no Mettle chief executive, for example, although Ellis in effect serves that function. “We are very much part of the bank,” he says.

We’d rather disrupt ourselves than others do it to us 
 - Andrew Ellis, RBS

Mettle is the latest of a series of initiatives in Ellis’s division that link to and benefit from the main bank’s systems in areas such as compliance, but not in IT. They include Esme, an online business lender that could later work with Mettle.

The philosophy is one of facilitating front- and back-office experimentation, unencumbered by the legacy IT systems, and with a venture capital-like approach that drip-feeds funding to the projects.

“We are investing heavily in digital innovations outside the core,” says Ellis. “It enables us to create things that we can distribute through our own business, NatWest; through a new set of customers that have not yet joined us, who are switching; or to customers who are with other platforms such as accountants and wholesalers.”


Alison Rose,

RBS is already the UK’s biggest SME bank, so commercial and private banking is RBS’s biggest division by assets. Indeed, observers point to this division’s head, Alison Rose, as the most likely candidate to succeed group chief executive Ross McEwan.

However, Mettle’s launch coincides with the start of a programme to, in effect, pay SME challengers to take market share from it, to satisfy EU state aid rules, after its 2008 government bailout.


Despite a series of reputational blows to RBS since its 2008 bailout, Mettle does not make any attempt to hide its affiliation to NatWest.

“Customers have told us that being part of NatWest is very important to them,” says Ellis. “They feel comfortable that a trusted high-street brand is behind it.”

RBS will gauge the market’s response to the new SME bank in a pilot phase, although Mettle is designed to be scalable. It leaves open the possibility of large numbers of NatWest clients eventually moving to Mettle.

“If I can build a good offer, I’m not worried about where the customers come from,” says Ellis. “If they come from NatWest, great. We’d rather disrupt ourselves than others do it to us.”

The main motivation remains changing demand. “Our customers are telling us that they want a different kind of bank,” he says.

The new bank is starting with micro-SMEs due to their large volumes and relatively simple needs, but eventually could later target bigger businesses.

“We will grow with our customers and move up the ladder of complexity,” Ellis predicts.