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An article relating to this blog post on Finextra:

Royal Bank of Scotland to spend £1 billion on retail transformation

The Royal Bank of Scotland is to spend over £1 billion over the next three years to rebuild its retail banking business, with investment in digital channels as the primary focus.

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Is RBS finally on the right track?

As a long time customer of RBS, I think the announcement last week by RBS to spend £1 billion on rebuilding their retail banking business is really great news and gives the bank a massive opportunity to reposition itself as the number one consumer bank in the UK. What the bank must do though is use this opportunity and the (not insignificant) budget very carefully.  To be successful it must be delivered through close collaboration between the business and IT.

While other banks are still spending most of their change budget on compliance this is a big gamble by the RBS board but one that can truly work if they plan and execute the programme effectively.

RBS must address the legacy issue if they are to be able to connect to their customers and provide a properly enhanced customer experience. Introducing new apps like tablet banking sounds great in a press release - but if the backend systems continue to have outages and rely on inflexible data structures then the bank will never be able to properly utilise any new front end - which would be a real wasted opportunity.

They must also tackle the big data issue.  In order to properly understand their customers they must get in control of the data, and then use it carefully.  Big data should enable the bank to understand their customers better and develop new more appropriate products and services to fit. Having the best front end in the market without the right products and services behind it will not fix their problem. This transformation cannot be done with a new front end alone - it will need to rely heavily on new core functionality and integrated back end applications. New core systems with flexible data structures and modern reporting facilities will have the massive added benefit of facilitating much lower compliance cost. 

By introducing new core systems RBS will also be able to develop and launch new products into the market quickly and hopefully enable their customers to select and build bespoke enhanced banking services based on their individual requirements. 

Whilst I really understand the need for quick wins and short term deliverables, without tackling the legacy issue and investing in new core systems the bank will never be able to deliver the value from this programme.  And without getting their compliance spending under control they also run the risk of this being another great announcement which ends up failing and eventually having its funding quietly withdrawn when the next crisis emerges. 

Executed well this could enable RBS to become the number one consumer bank in the UK and provide a great return for the tax payer.



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