Royal Bank Of Scotland (RBS) Launches Robo-Advisory Services

In order to attract young investors, Royal Bank of Scotland (LON:RBS) (NYSE:RBS) launched robo-advisory services through its NatWest Invest platform. This is a new digital and low-cost option aimed at helping customers who prefer managing their investments themselves.

This new investment program is a blend of technologies and provides access to professional advice from the company’s advisory department. It also seeks to target the existing customers of Royal Bank, who are yet to open an investment account. Thus, revenue generated from this will be split between the bank’s retail banking operations and its asset management operations as they provide investment platform and investment manager, respectively.

People can start investing using the new platform with a minimum investment of £500 and monthly contribution of £50. This will be managed at a minimal annual advisory fee of 0.95% of funds for a year.

The company’s incremental operating costs for providing these services are expected to be much lesser than the expected revenues. As a result, RBS’s private banking division is expected to obtain the benefits in the form of rising assets under management and fee revenues.

Royal Bank claims to be the first in the U.K. to launch robo-advisory service. However, banks in the United States started this fairly early. A few U.S. banks having similar services include Charles Schawb (NYSE:SCHW) and Bank of America (NYSE:BAC) . These have existed for some time now and provide services at a cheaper rate.

While other large banks in the U.K. are working on it, HSBC Holdings (NYSE:HSBC) had announced its plans to initiate robo-advice earlier this year. It is expected to launch the service early next year.

Shares of Royal Bank have gained 44.6% in the last 12 months, outperforming the industry’s rally of 21.7%.

Currently, the stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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