The Royal Bank of Scotland is thinking about creating a £750 million FinTech package fund designed to boost competition in the U.K.’s business banking sector as it considers replacing the sale of the Williams & Glyn branches.
According to a report from the Financial News , the FinTech fund is part of a plan by RBS to provide an alternative solution to the sale of around 300 bank branches in order to meet the conditions of its £46 billion government bailout in 2008.
Even though RBS has successfully carried out four of the five major divestments agreed with the European Commission (EC) in 2009, the bank has not been successful with the sale of Williams & Glyn. However, external factors such as being unable to separate the branches from RBS’s technology systems, are reported to have prevented it from happening.
The proposed new FinTech fund, administrated by an independent body, will be available to qualified challenger banks to facilitate them to incentivize SMEs to switch their accounts from RBS.
A spokesperson for the Treasury said:
This new plan provides a clear blueprint to increase competition in the UK’s business banking market, and would help RBS resolve one of its most significant legacy issues which has held back the sale of the taxpayers’ stake.
RBS is one European bank that is still feeling the effects from the 2008 financial crisis.
It’s reportedly still awaiting the total settlement cost for the role it played in the market ‘for US residential mortgage-backed securities prior to the crisis,’ after the taxpayer had to bail it out.
And yet, in 2015, it was reported that N M Rothschild of Rothschild & Co., one of the world’s largest independent financial advisory groups, advised the U.K. government to sell RBS quickly and cheaply.
Of course, while RBS has managed to settle four out of five agreed divestments with the EC, it appears that the proposed FinTech fund could be the answer the bank is searching for.
Even though the U.K. is considered a world leader for FinTech, the banking sector remains beleaguered with legacy issues. At the same time, it needs to think seriously about updating it technological capabilities.
It seems, though, that despite the government’s pro-blockchain position, U.K. banks are continuing to shun the advances of innovative technology such as the blockchain and bitcoin. Many bitcoin brokerage companies no longer support British Pound deposits or withdrawals or have had to close completely.
Featured image from Shutterstock.