Before the NatWest takeover, RBS drew most attention for establishing Direct Line in 1985 – the first UK insurance company to use the telephone as its main channel and so replace middle men with speed. RBS was also behind the successful launch of the first UK offset mortgage account with Virgin. This direct model has now been successfully translated to Germany and the US. A key aspect of the RBS strategy is to build strategic options and the corresponding diversity and flexibility mean that growth is not dependent on one particular economic scenario or market development. This approach and concomitant benefits are evident in its recent results.

In 2005 total income rose by 14%, with organic growth contributing most to this, accounting for 70% of the increase. At the same time, the critical cost / income ratio was held at 41%. With new innovation teams operating in both the retail banking and insurance areas of the business, continued growth in income, profit and earnings looks certain. Internal innovation developments in 2005 included RBS being the first major international bank to announce that it had gone live with streaming FX spot trading via the Bloomberg Professional Service. This new eCommerce development complemented RBS' existing electronic trading capabilities on Bloomberg allowing clients to trade Foreign Exchange and Fixed Income online - all from one single platform. Additionally in 2005, to drive further innovation across its business, RBS appointed a Global Innovation Director, mirroring Citibank, one of its global rivals.

In August RBS signed strategic investment and co-operation agreements with Bank of China, the second largest bank in China, leading a consortium that invested $3.1 billion, taking a 10% stake. RBS itself invested $1.6 billion, and is already working closely with Bank of China to develop business co-operation initiatives in areas such as credit cards, wealth management and corporate banking. RBS is also supporting Bank of China in key infrastructure areas, including risk and financial management, human resources and information technology. Alongside its continued US and European growth, this deal cements RBS’ position as a major global player and a company that is looking to take advantage of opportunities from the growing Chinese economy.