Recently NatWest announced the closure of their UK digital bank Bó after only six months. Bó has had a rocky journey since it started, with the departure of senior executives and technology issues including having to reissue cards because they were not compatible with Strong Customer Authentication. When compared to the progress that other UK digital banks, including Monzo, Revolut and Starling have made, a grand total of 11,000 customers seems bizarrely small.
So what went wrong for NatWest? Surely with all the resources of a big bank behind Bó and £100 million investment it should have been able to take a piece of the digital banking market?
I opened an account in the early days to compare it to other digital banks and was immediately disappointed at the functionality and user experience, starting with no Face ID to sign in. Who wants to use a six-digit code to enter an app?
However, Bó’s problems were clearly deeper than that. The UK has a very vibrant and competitive digital banking market with some excellent players. Trying to take market share when you’ve missed out on the early adopters and your competitors have such rich functionality was always going to be hard. Functioning as a dynamic fintech startup created cultural clashes in a traditional bank, hence the departure of the CEO two months after launch. A new group CEO with different priorities didn’t help Bó either.
So what conclusion should we draw from this? Are the traditional banks doomed to fail when launching new digital banks? Yes, if the new digital bank is strongly tied to the culture of the parent bank. The NatWest digital small business bank, Mettle (which inherits the remnants of Bó) seems to be surviving but it has more independence. The end of Bó demonstrates the difference between a bank that is digital from the core, like a Monzo, and a digital bank created by a traditional multi channel bank. A bank that has customers across every demographic will struggle to reinvent itself when it’s hampered by the need for service delivery via branch, phone and digital. This problem also manifests itself in apps from traditional banks which typically feel like limited functionality digital bolt-ons.
Banks that were designed as digital from the start are delivering relevant banking that makes customers’ lives easier and demonstrating what the future of retail banking looks like.