Today I am looking at why Royal Bank of Scotland Group’s (LSE: RBS) (NYSE: RBS.US) tech drive should give revenues an extra kick.
Banking big on next-gen technologies
As technological innovations have made people across the globe become increasingly attached to their mobile phones — from updating their status on Facebook through to indulging in a spot of online shopping with Amazon — financial institutions are significantly hiking their investment in this area in order to grab customers who prefer to do their banking online.
And Royal Bank of Scotland underlined its intention to take advantage of these attractive consumer trends just last month, when it pledged £1bn to invest in its technological infrastructure for both personal and small corporate customers.
Large chunks of this cash will be used to increase the number of its ATMs across the country, as well as cash and deposit machines (or 
CDMs) in-branch. However, the company said that the drive “will concentrate on the bank’s digital services to make it easier for customers to bank while on the move, and accompanies bank-wide moves to improve the resilience of NatWest and RBS systems.”
The programme will include merging its individual and business apps for customers to make the banking experience simpler for customers holding both types of account, as well as creating a more bespoke service for its users. On top of this, the company is also planning to kit out 400 of its branches with Apple iPads, as well as in-store wi-fi internet facilities, for customers to access its online banking service.
Group chairman Sir Philip Hampton underlined the growing disparity between online banking and traditional trips to the branch at the company’s AGM in June. While the company has seen banking activity via PC and online devices leap by 232% since 2011, customer activity at the company’s counters has dropped by almost a third over the same period.
Like all of the UK’s high-street banking behemoths, Royal Bank of Scotland is undergoing a huge branch closure programme as part of a wider programme to slash expenses and shed non-core assets.
With the company desperate to bolster its balance sheet and improve its earnings outlook, particularly as it is looking to return to full privatisation sooner rather than later, I believe that Royal Bank of Scotland’s aggressive move towards online banking marks a huge step in the right direction.
