UK banks will be monitoring the progress of ‘Bó’ closely, the new digital ‘challenger bank’ launched by RBS Group this week as a standalone vertical.
Launching the Bó app, RBS will compete in the saturated ‘neo bank space’ against well-financed and resourced start-ups such as Monzo, Revolut and Starling Bank, regarded as darlings of the current UK Fintech scene.
RBS becomes the first major UK bank to launch a digital challenger vertical, whilst others have chosen to view the marketplace from the sidelines and monitor developments for what tech observers believe will become an aggressive M&A scene.
This Summer, RBS restructured its digital division acquiring the IP and enterprise team of insolvent Loot.io for £3 million. The London-based developer will form the ‘tech stack’ for Bó’s future enterprise.
Former RBS Group COO Mark Bailie has been appointed as Bó Chief Executive, supported by Loot.io co-founder Ollie Purdue as the enterprise’s product lead.
The management of Bó will be overseen by RBS Group subsidiary NatWest, who will maintain the challenger bank’s UK operating licence.
Staking an initial £3 million on its new venture, tech and banking observers will be monitoring how RBS leverages its existing network to help grow Bó against aggressive neo bank competitors, who according to Accenture analysis snapped up 5 million new UK accounts during the first-half of 2019 trading.
A further caveat, sees Bó’s success hinge on whether RBS can develop a dynamic brand and mass-market proposition for its new vertical, establishing Bó credentials against high-spending challengers Monzo, Revolut and Starling Bank.
“With Bó we have an opportunity to help address a genuine societal need and to be a positive force in our customers’ lives. Our aim is to transform the nation’s attitudes and behaviour around money and I’m hugely excited to see what we can achieve.” – Mark Bailie detailed what has become a standard narrative, for challenger banks when reality dictates that Bó will have to offer much more.
To date, Monzo and Revolut venture funding tracks at £350 million each, whilst Starling Bank broke its £200 million funding barrier in 2019.
Of particular note, the Bó venture will further test RBS’ investor management credentials, as the highstreet bank’s reputation continues to recover from its near-death 2008 financial collapse.
Supporting the continued turnaround of 70% state-controlled bank, will RBS stakeholders support the development of costly digital enterprise, operating within a marketplace in which no incumbent to date has proven its earnings and profits capacity.
Put simply, competing within hostile digital pastures, the Bo venture should prove RBS and others, whether the UK challenger scene is no country for old banks…