Branches Aren’t The Problem, They’re An Advantage, Says Santander Chief

While U.S. banks are closing or shrinking branches at a steady pace in the face of the rise in online banking and mobile banking apps, European banking giant Banco Santander sees those branches as a competitive advantage that online-only banks can’t match, according to Finextra.

Santander Group chairwoman Ana Botin said in an interview with the Financial Times that while industry consensus says banks should scale back their branch networks, the branches give traditional banks an edge over tech companies like Apple, Facebook, Google and Amazon, which are increasingly involved in finance but have more cash and fewer regulations to deal with than banks.

“You are not going to get married through technology. You are not going to buy a house through technology. I think that is where we are going to compete very effectively with these guys, if we can find a model that combines the personal side with the technology,” Botin said.

“The fact is even young people like to go to a branch at least twice a year. That means you need quite a significant retail presence, which they [the big tech companies] don’t have,” she added.

But that advantage is in addition to, not instead of, digital banking. Santander currently has 28 percent of its customers using online banking, and is aiming to raise that to 45 percent over the next two years. The bank calculates that its digital customers are 2.6 times more profitable than regular customers, according to a presentation to analysts announcing its earnings on Tuesday (Feb. 3).

Santander has a $3 billion global IT budget, and Botin called digital banking an “essential theme.” As head of Santander UK between 2010 and 2014, she set up a $100 million fund to invest in fintech startups. Botin also forged an alliance with U.K. alternative lender Lending Circle for small-business loans.

“I think of digital as a means to an end: How do I service and get more loyal customers, how do I achieve operational excellence, and how do I change my culture?” Botin said. “Those are my three building blocks and if you think about it, digital comes into it in every single one of them.”


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