The Royal Bank of Scotland has made an investment in a digital current account that is aimed at students and young people. The digital banking startup has set out to rival challenger banks such as Starling, Atom, and Monzo.
The £2 million investment in Loot, a fintech startup, was made through Bo, the digital-only retail bank of Natwest, which is scheduled to launch this year. It takes its total shareholding to 25 percent after an initial £3 million investment in July last year.
Loot was launched in 2014. It aims to help students manage their finances and it currently has more than 175,000 sign-ups.
Verified customers are provided with a pre-paid debit card. They are also given some insights into their spending habits, with the option to set daily or weekly budgets. What makes Loot different from the others is that its users can set controls and receive spending insight on that purchases they made with the debit card to help the younger consumers save more.
The new bank is being built by a lean team of bankers and developers. It is expected to operate a marketplace model, meaning partnerships with various fintech companies.
The deal is considered as the first move of this unit of RBS, which is planning to establish a partnership with other FinTechs. The digital bank is set to cater to consumers who live paycheck to paycheck and have little in the way of savings.
Mark Bailie, the former RBS COO and the chief executive of Bo, stated: “Loot is a really exciting brand and one that we’re proud to be associated with.”
He added: “Through its innovative use of technology and intention to change the status quo, it’s quickly built a following of loyal customers, with potential for rapid future growth.”
Other investors in Loot include Global Founders Capital, Portage, and Speedinvest.