The idea, put forward by HM Treasury, will come as part of the bank’s state aid commitments agreed with the European Commission (EC) in 2009 that RBS would carry out five major divestments.

Four have been successfully implemented, but the fifth – the sale of Williams & Glyn – has been unsuccessful due to external factors.

The new plan will see RBS create a fund, administered by an independent body, which will be available for eligible challenger banks to help them incentivise SMEs to switch their accounts from RBS.

In addition, the bank will grant business customers of eligible challenger banks access to its branch network for cash and cheque handling.

An independent fund will also be created to invest in fintech to support the business banking of the future.

“RBS must deliver on its remaining state aid commitments and this new plan represents the most effective way of delivering the pro-competition objectives behind them,” a spokesperson for the Treasury stated.

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“This new plan provides a clear blueprint to increase competition in the UK’s business banking market, and would help RBS resolve one of its most significant legacy issues which has held back the sale of the taxpayers’ stake.”

The new plan is expected to cost RBS in the region of £750m, but the bank has already taken a provision within its 2016 annual results as a consequence of the new proposal.

“Today’s proposal would provide a path to increased competition in the SME market place,” said Ross McEwan, CEO of RBS.

“If agreed, it would deliver an outcome on our EC state aid divestment obligations more quickly and with more certainty than undertaking a difficult and complex sale and would provide much-needed certainty for customers and staff.”

Rishi Khosla, co-founder and CEO of challenger OakNorth Bank, felt that it was important the fund did not just focus on current accounts and was used to increase challenger banks’ capabilities to deliver a range of products and services.

“According to the CMA’s retail banking investigation, 80% of SMEs bank with the big four, and 90% go to their current account provider as their first port of call when seeking a loan, so it is clear that more competition is needed.

“We welcome proposals for a new fund to support investment in financial technology.

“While the UK has established itself as a world leader for fintech, much of the banking sector is still plagued with legacy issues and needs to drastically modernise its technological capabilities.”

RBS said it would be continuing discussions with the Treasury and the European Commission, but said the reintegration would likely create some additional restructuring charges during 2017 and 2018.