Its investment banking division was stripped right back and world-class businesses it owned like WorldPay and Direct Line were sold at the behest of the European Commission.
Also demanded by the Commission, in return for the UK government’s state aid, was the separation of a chunk of branches and small business customers with the aim of creating a new bank to drive competition in small business banking.
When that proved too problematic, as it had warned, RBS was instead obliged to create a new fund for competitor banks to lend to SMEs. And then there were the various fines and penalties RBS was forced to pay, chiefly to the US authorities, for past wrongdoing.
What there hasn’t been so much of, however, have been genuine opportunities to grow the business and do something different.
That is why today’s launch of Bó, the organisation’s new digital bank, feels quite a big moment for the lender, which remains 62.1% owned by the taxpayer.
Bó, which has cost an estimated £100m to develop, is seen by its parent very much as a competitor not to the existing online propositions of NatWest’s rivals but rather a rival to the new wave of online banks that have proliferated during recent years, such as Starling Bank, Revolut and Monzo, the latter of which RBS is thought to have made an informal offer for two years ago.
While Bó is part of NatWest, RBS’s brand in England and Wales, using NatWest’s banking licence, it has been set up as a cloud-based digital bank in a so-called “greenfield” space.
According to Mark Bailie, its chief executive, this was crucial to its development.
RBS, like all of the big four commercial banks, relies on a complex patchwork of legacy IT systems that are prone to breaking down.
For instance, even though RBS has owned NatWest for 19 years, the two have IT systems that are separate in some cases.
And not just the big four: the reputation of TSB, the UK’s sixth-largest commercial bank, was shredded by the IT difficulties it suffered last year which claimed the job of its former chief executive Paul Pester.
As Mr Bailie put it today: “As we’re part of NatWest, people can rely on Bó to keep their money safe. But as a digital bank, built entirely on a separate cloud-based technology, Bó is also able to harness new technology and develop rapidly in line with our customers’ needs and expectations.”
Aspects of Bó’s launch do not disguise the way it is seeking to take on the other so-called “neobanks”. The bright yellow Visa card with which it is issuing new customers recalls the garish coral colour of the cards issued by Monzo. The mobile app for Bó is downloadable from the App Store and from Google Play.
It would be a mistake, though, to assume that Bó is merely targeting millennials and digital natives.
In an interview with a report published earlier this year by Oliver Wyman, the management consultancy, Mr Bailie said: “RBS is a large bank, with just under 20% of the current account market in the UK. We serve everybody and are able to put together quite a detailed view of how people deal with their finances.
“We know that 40% of working-age adults in the UK – that’s just under 17 million people – have less than £100 of savings. That’s not just down to incomes – relationships with, and understanding of, money are also factors. So, we see a clear need for services that can help those millions of people to manage their money better, but crucially, delivered in a way they are willing to engage with.”
That approach appears to have informed a lot of the way Bó works. The traditional approach of most commercial banks, during the last 30 years or so, has been to come up with products and services and then sell them to their customers.
Because Bó was being built from scratch, it was easier to analyse the habits of customers and then create a service based around them, rather than the other way around. This customer-centric approach, Mr Bailie told Oliver Wyman, was driven by Ross McEwan, RBS’s chief executive from 2013 until last month, when he handed the reins to Alison Rose.
To that end, the team that developed Bó crunched anonymised data from 2.6 million NatWest customers and established that half of these people spent all of their earnings, with an additional quarter consistently spending more than they earn.
For all customers earning less than £100,000 annually, there was no link between the amount they earned and the amount they saved.
Accordingly, the service was developed with the help of experts in behaviour and money management, with the aim of ingraining customers with the kind of habits practised by savers. The app includes functions that enable customers to see everything that they have bought on the card categorised by retailer, category and location. Customers are also sent instant alerts whenever they use the card so they know how much they spent and where.
Mr Bailie added: “In this digital, contactless age, people need support managing their money more than ever. It is all too easy to lose control. Our data suggests that three-quarters of people in the UK are living financially unsustainable lives. We want to help change this.
“We are launching Bó to help people build the habits and routines that will allow them do money better day by day and week after week so they can fund their lives and lifestyles in a more sustainable way.”
The launch is not without risks. RBS has not yet rebuilt its profits to the extent that a £100m investment is loose change in the way it would have been to the bank prior to the crisis.
Moreover, there will be a balance to the extent to which Bó draws attention to its NatWest parentage, which may reassure some customers but which may repel others.
One reason why the likes of Starling, Monzo and Revolut have done well is precisely because they are independent of the big four and thus untarnished by preconceptions of poor customer service and smacking customers with penalties every time they stray into the red. And, by specifically targeting customers with less than £100 in savings, Bó stands little chance in its early days of making much by putting to use unused balances in customer accounts.
That may be the wrong way, though, of looking at this business.
Customers are increasingly switching to app-based digital banks and, for the established lenders, there is a danger of being left behind if they do not move with them.
So you may be certain that all of the other established commercial banks will be watching this particular launch more closely than they would normal competitor activity.