The news came just days after the Bank of England revealed which superstar artist will appear on its next £20 note - but led to a bit of confusion among those not educated in Scottish modernist literature.
But never fear - we have everything you need to know about one of Scotland's most important early-20th century writers here...
Hold up. RBS gets to chose who goes on £5 notes?
Haven't spent much time in Scotland, I take it? Scottish banks - including RBS, Clydesdale and Bank of Scotland - all issue their own banknotes north of the border, which are legal currency across the whole of the UK. RBS has been issuing notes since 1727, and has an average of £1.5bn of notes in circulation on any given day.
So who was Nan Shepherd?
Born in 1893 near Aberdeen, Shepherd wrote three novels set in rural communities in Scotland, as well as poetry. Her non-fiction work, The Living Mountain, wasn't published until 1977, four years before her death.
What were her other works?
Her first novel, The Quarry Wood, was published in 1928. That was followed by The Weatherhouse, in 1930, and A Pass in the Grampians, in 1933. An anthology of her poetry, In the Cairngorms, was published in 1934.
And why was she chosen?
RBS said in the process of designing the new notes, it chose the theme of "The Fabric of Nature" to underpin the elements of the new note set.
Given that theme, writer Robert Macfarlane said Shepherd was an obvious choice.
"The Living Mountain is a slender masterpiece, that has brought many thousands of readers to see the Scottish landscape with fresh, astonished eyes. In person as in language, Nan followed her own path - she was a woman of fierce independence and inspiring vision."
Who chose her?
Shepherd was chosen by the board of RBS Scotland - although it added that it "engaged with thousands of people across Scotland through workshops, online communities and polling surveys".
It follows an online vote in February which led to artist Mary Somerville being chosen to feature on the new £10 notes. No word on why The People weren't asked about this one - perhaps RBS was eager to avoid a Boaty McBoatface situation.
- Update 10.55am: RBS has been in touch. "I... wanted to assure you that the decision for our Scotland Board to choose the £5 portrait had nothing to do with ‘Boaty McBoatface'.
"The decision on the £5 was actually taken a long time before our public vote on the £10 (as you would expect given it goes into circulation a year before), so this decision was taken last year and pre-dates by some way Boaty McBoatface.
"Nice theory though."
So now you know.
What else will the notes feature?
According to RBS, the reverse of the new £5 note will feature two mackerels, "the single most valuable stock for the Scottish fishing industry", as well as an excerpt from the poem The Choice by Sorley MacLean. It will also feature a quote from The Living Mountain.
When will it come into circulation?
Later this year. The new £10 note, featuring Somerville, will come into circulation in 2017 (just FYI).
Anything else we should know?
New notes will be 15 per cent smaller and printed on polymer (like the UK's new £20 note, which, incidentally, won't come into circulation until 2020).