Ross McEwan, who took over from Stephen Hester last month, told MSPs he is planning a “fundamental change in the way we do business”.
Without mentioning the 700-strong branch network specifically, he told a gathering of business leaders and politicians in the parliament chamber that the number of branch transactions had fallen by 30 per cent since 2010.
He added that the bank had to find ways to enable customers to do their banking “in new and different ways” and announced a £30 million investment in cash machines that will provide a wider range of services.
“We are going to have to make some fundamental changes,” he said, confirming that a review of the entire business is under way.
The outcome of that review is expected around the time RBS presents its full-year results in February.
In a speech that referred several times to the “customer”, he made it clear that RBS would be refocused from a profit-driven acquisitions body to one that provided a service.
He acknowledged the mistakes of the past that now had to be rectified, accusing the banks of taking their customers for granted.
“And now the consequences of our conduct are catching up with us,” McEwan admitted.
“RBS was saved by the taxpayer at enormous expense. We must never put this country in that position again. There can be no compromise on the safety and soundness my predecessor Stephen Hester worked so hard to regain following the 2008 crisis.”
Savers, borrowers, homeowners, small businesses and large companies need to be able to rely on the bank “because we had to rely on them”, he said.
McEwan noted that much work had been done to strengthen the capital position, off-load Citizens in the United States and re-package the under-performing and non-core assets which were absorbing too time and energy. “These distractions kept us looking backwards. Now we can move forwards by making these changes and redirecting our focus on customers,” he said.
The bank has responded positively to a review of small business lending conducted by former Bank of England deputy governor Sir Andrew Large.
RBS will cut the time taken to decide on loan applications and have more decisions taken locally. The bank has made a further £6 billion of borrowing available to small firms on top of an initial £4bn.
He said the bank’s commitment to communities and helping encourage new business was evident in its support for the Princes Trust in Scotland and for Entrepreneurial Spark, a relatively new initiative now operating in Ayrshire, Edinburgh and Glasgow.
The bank provides funding and mentoring advice to early stage businesses going through E-Spark and yesterday pumped in a further £200,000.
But the biggest changes the bank would make are likely to be for the personal customer who is being “empowered” by technological change.
“We no longer dictate how customers interact with us – they are dictating that, quite rightly,” he said.