London-based NatWest Group increased its tech spend in the first half of 2023 as the company looks to remain competitive, create resilient operations and leverage tech to accomplish its climate transition plans.  

The $28 billion bank spent $10.8 million in H1 2023 on technology while its operating expenses jumped by 13.4% year over year to $204 million, according to the bank’s earnings supplement.

NatWest is working to improve customer experience and increase productivity through its digital transformation, Alison Rose, chief executive officer of NatWest Group, said during the earnings call today. 

“We expect to invest around £3.5 billion [$3.8 billion] between 2023 and 2025,” Rose said. “To future proof the business as our ongoing digital transformation helps to drive efficiencies, improve customer experience and deliver future growth.” 

The bank reported that it’s scaling its digital and payments offerings to improve customer journeys.  

NatWest’s Mettle, a small-business digital banking account for up to two entrepreneurs, has grown its customer base to almost 100,000 with 17,000 new accounts opened in H1 2023. NatWest’s digital business payments platform, Tyl, saw $2.8 billion transactions processed, a 64% year-over-year increase, and 8,000 new merchants onboarded in H1 2023, according to the bank’s earnings supplement. 

BY THE NUMBERS: In the second quarter, NatWest reported; 

• A total income of $4.8 billion, down 0.6% quarter over quarter; 
• Net interest income of $3.6 billion, down 2.7% QoQ; and 
• Operating expenses of $2.4 billion, down 3.1% QoQ. 

NOTEWORTHY: Nearly 61% of NatWest “retail customers are entirely digital and almost 90% of retail customer needs are met digitally,” Rose said during the earnings call. In the commercial banking segment, 84% of clients have “acted digitally” and 93% of all those accounts are opened online or via a mobile app. 

Rose said NatWest’s digital transformation of services is helping it acquire more customers while driving efficiency. 

The bank reduced its headcount by 3% YoY in H1 2023 “as a result of continued digitalization, automation and improvement of end-to-end customer journeys,” per the bank’s earning supplement.  

In Q2 2023, NatWest’s employee expenses stood at $79.1 million, compared to $79.5 million in Q1 2023, the earnings report notes. 

FLASHBACK: In June, NatWest completed the acquisition of Cushon, a workplace savings and pensions fintech, for $185 million [£144 million] and holds 85% equity in the company, per the company’s press release. The acquisition resulted in a $2.4 billion increase for the NatWest Group’s assets under management. 

In March, NatWest Group teamed up with digital identity system OneID to provide an embedded verification system for U.K. clients. The move was aimed toward utilizing technology to help customers avoid falling “victim to phishing attacks or keylogging software,” Kevin Dearing, head of API commercialization at NatWest, previously told Bank Automation News. 

STATE OF PLAY: Major European banks such as Banco Santander, Deutsche Bank and Lloyds Bank also have prioritized efficiency in the first half of the year by leaning into technology to beef up their tech talent acquisition and improve their digital offerings. Lloyds hired 1,000 employees in technology and data roles during H1 2023, while Deutsche Bank increased its headcount 12% YoY to 23,314 in the same time period.  

FUTURE LOOK: Nearly 80% of NatWest’s investment is in data, digital and technology, and the bank is seeing the positive impact of those investments, Rose said during the earnings call. The bank aims to continue its investment in tech to “drive operational leverage” going forward, Rose said. 

MARKET REACTION: NatWest stocks were up by 2.50% on Friday trading and stood at $6.34 per share at 3:20 p.m. ET.