Banking giant Royal Bank of Scotland (RBS) is working to create a standalone digital bank, Sky News has reported.

The creation of a digital bank is expected to enable it to challenge new British fintech firms such as Monzo and Revolut.

In nine months, Monzo’s user-base is said to have increased by 300% to 450,000, while Revolut had 1.5 million users across Europe by the end of last month.

According to the report, RBS has assigned one of its top executives for this project as well as allocated tens of millions of pounds to design the new digital platform.

Currently, the development is it in initial stages and may not result in a new potential bank coming to market.

The plans including its launch date and structure within RBS is yet to be decided.

In its statement to the Sky News, RBS spokesperson did not confirm the development of the digital bank. However, she stated that the bank needs to keep pace with the changing industry and introduce new approaches to improve their service to the customers.

Recently, RBS reported its first annual profit in the decade since it was bailed out by the British government.

The bank reported attributable profit of £752m in fiscal 2017, compared to an attributable loss of £6.95bn in the previous year.