The state-backed Royal Bank of Scotland (RBS) is working on secret plans to create a standalone digital bank to compete with emerging British fintech champions including Monzo and Revolut.
Sky News has learnt that RBS has assigned one of its top executives to the project, which is so confidential that few people inside the company are aware of its existence.
Sources said on Monday that the work is being led by Mark Bailie, the bank's former chief operating officer.
Tens of millions of pounds are already understood to have been earmarked for the new digital platform, which is still in its very early stages and may not result in a viable new lender coming to market, according to one insider.
News of the project comes weeks after RBS announced its first annual profit in the decade since it was bailed out with more than ￡45bn of taxpayer support.
RBS has already struck agreements with a number of leading fintech companies such as Funding Circle, with which it works to direct customers to peer-to-peer and other providers of alternative finance.
Mr Bailie's efforts to create a standalone digital bank is a tacit acknowledgement of the strides being made digital challengers such as Monzo, which announced on Monday that it had signed up 500,000 current account customers.
The financial advantages enjoyed by digital lenders are hastening the closure of high street branches - a subject which continues to draw political opprobrium from critics of Britain's five biggest lenders: Barclays, HSBC, Lloyds Banking Group, RBS and Santander UK.
Details of the RBS plan are sketchy and subject to change, with uncertainty about a potential launch date, its autonomy within RBS and the branding of the new venture.
In a statement issued to Sky News, an RBS spokeswoman said: "Our industry is changing rapidly and therefore we need to keep pace with this by launching new approaches to better serve our customers.
"We will not comment on media speculation, but we're focussed on using automation and technology to deliver a more efficient banking experience that better reflects the changing way our customers now bank."
Creating a new lender from scratch is likely to prove technologically much simpler for RBS than its ill-fated efforts to carve out hundreds of branches into a separate network which would have revived the Williams & Glyn name.
Those attempts, which involved two separate agreements to sell the business to Santander UK, collapsed, resulting in RBS having to secure approval from Brussels for an alternative plan to reduce its market share.
RBS has now overcome many of the legacy issues which have plagued it since the era of Fred Goodwin, its former chief executive, and it is expected to conclude the biggest remaining hurdle - a multibillion dollar fine from the US Department of Justice for mis-selling mortgage-backed securities - in the coming weeks.
As RBS's chief operating officer since April 2016, Mr Bailie played a pivotal role in the conclusion of its winding down of RBS Capital Resolution, the so-called 'bad bank' set up after its bailout.
Prior to that, he was in charge of its Non-Core Solutions unit, and has also worked at Barclays.