By Roger Baird on Thursday 23 May 2019
The digital current account is seeking a buyer months after securing millions from Royal Bank of Scotland.
Digital current account Loot has collapsed into administration months after being handed a second multi-million pound investment from Royal Bank of Scotland (RBS).
The London-based start up was forced to call in Smith & Williamson on Wednesday after running out of day-to-day operating cash.
RBS injected £2m into the financial app aimed at helping students and young people to save money in January, securing a 25 per cent stake in the business. That followed an earlier £3m investment by the high street giant last July.
Loot customers are provided with a pre-paid debit card and are offered personal breakdowns of their spending patterns, allowing them to set daily or weekly budgets.
The start up is understood to have hit financial trouble after RBS decided against buying the entire business, which launched in 2014.
Loot searched for cash through a crowfunding round launched on Seedrs, encouraging its 200,000 customers to register interest. But the move failed to stop the business hitting its cash crisis.
Smith & Williamson joint administrators Henry Shinners said: “While the Loot offering is one that has attracted a lot of interest and praise, the business wasn’t yet generating sufficient revenues to meet its ongoing costs and unfortunately the board could not secure the additional funding needed.”
He added: “We are in advanced talks with other providers operating in this space to take over the services provided by Loot with a view to securing continuing, uninterrupted service to its customers.”
The administrator added that deposits are safe, and customers can continue to access the service.
RBS made its investment through Bó, the standalone digital bank the high street lender is testing and plans to launch later this year.
Most high street banks are running a mixed strategy of setting up their own app operations as well as buying, or investing in rivals, in a bid to compete with digital banks such as Monzo, Revolut and Starling who have added millions of customers in a few years.
