Royal Bank of Scotland's legacy IT infrastructure is putting it at a competitive disadvantage, the bank has stated, with rivals able to offer more innovative technologies to customers.
Outlining operational risks to the business as part of its annual financial report, the bank said that its systems, which have become increasingly complex following years of acquisitions, could hinder its ability to offer new services to customers in an increasingly competitive marketplace.
"Certain competitors may have stronger and more efficient operations, including better IT systems allowing them to implement innovative technologies for delivering services to their customers," the bank said.
For example, RBS will offer mobile payments at the end of the year, as part of the launch of the industry-wide Paym initiative. However, it lags behind others, such as Barclays, Santander and HSBC, which will offer the service next week (from 29 April).
Meanwhile, RBS faces competition from newer, more agile banks, which do not have legacy IT issues to contend with.
RBS is in the process of simplifying its legacy IT estate as part of a multi-year programme that involves an additional £750 million investment in improving system resilience. In contrast, Metro Bank and Sainsbury's Bank have outsourced much of their IT operations to enable greater flexibility and reduce costs, while new players such as online and mobile-only Atom Bank will be more able to build their systems from scratch using off-the-shelf software or relying on cloud services.
Also, while other banks have similar legacy concerns, some have invested in new customer-facing services innovation. Mobile banking is one example, with Barclays setting up a new data centre infrastructure to support its person-to-person mobile payments platform, Pingit. The app has now been downloaded two million times, having launched in 2012.
Last year, RBS announced a review of IT operations to assess how its systems function for the benefit of customers, with many of its 1.3 million complaints relating to technology issues.