Tax-payer owned Royal Bank of Scotland has pledged to take out a further £750 million in operating costs over the next year and £2.5 billion over the next four years after reporting widening losses, its ninth-successive year without a profit.
The bank's net loss for 2016 rose to £6.96 billion from £1.98 billion a year earlier. RBS says it expects to post a profit in 2018 by further removing operating costs and doubling down on digital initiatives across the board.
In the consumer market, more job cuts and branch closures appear inevitable.
RBS chief executive Ross McEwan says a fifth of customers now solely use mobile and digital channels to interact with the bank. "Digital innovation means customers are doing more of their transactions online," he says. "We interact with our customers over 20 times more through digital channels than physical ones. Thirty-five percent of all new products were taken out digitally in UK PBB, and this is rising steadily."
While not specifying numbers, McEwan's words have sparked anger at labour union Unite, which has called for a moratorium on branch closures, highlighting the shuttering of over 520 RBS branches since 2014 and the loss of tens of thousands of jobs.
Unite national officer Rob MacGregor says: “While banking habits have changed, we would urge RBS and the government to pause and reflect on the bank's current path, which risks cutting too far, by putting a moratorium in place on further branch closures."
Digital upheaval is not just confined to the personal banking market, says McEwan. "We are aiming to service 95% of our commercial customers’ needs through mobile and online by 2020, up from nearly 80% today, by introducing a new digital banking service that will greatly improve experience," he says. "We’re also responding to customer preferences for more innovative lending platforms and products online."
The bank also intends to invest heavily in technology at its NatWest Markets business, replacing hundred of separate product databases with a single scalable platform. It will also roll out a single dealer platform for FX and rates over the coming year.
"This bank has great potential," maintains McEwan. "We believe that by going further on cost reduction and faster on digital transformation we will deliver a simpler, safer and even more customer-focused bank."