Santander Rolls Out US Digital Deposits To Rival Goldman

Spanish lender Santander is planning to launch an online deposit platform in the U.S., the Financial Times (FT) reported on Sunday (Oct. 20).

The bank is planning to roll out a “national deposit gathering platform” in 2020 to reel in more attractive rates for its consumer business, Scott Powell, chief executive officer (CEO) of Santander in the U.S., told the FT.

Santander’s $145 billion U.S. financial statement spans credit cards, car loans and banking, and is considered an important asset among European players.

The bank only operates physical branches in nine states, which limits its ability to attract deposits. Santander’s car loans, however, are offered through dealerships nationwide.

To increase deposits and increase access to U.S. investments, Santander aims to establish a new online portal with better money market rates than Wall Street banks, Powell said.

Santander is looking to compete with Marcus by Goldman Sachs’ 2016 offering of 1.9 percent deposit rates. Although Marcus is also an online lender, Powell – who was formerly with JPMorgan Chase – said Santander’s new U.S. platform will not offer loans.

Challenger banks in the U.K. are having a hard time competing with the country’s big four financial institutions. While challengers such as Metro Bank, Santander and Monzo were expected to rival the dominance of the big four, they are failing to thrive. In September, Santander lost $1.8 billion (1.5 billion pounds) from the valuation of its business, while shares in Metro Bank fell 30 percent after it was forced to cancel a planned bond sale.

Although lawmakers professed their support of the new competition, the banks said they have been stifled by tough regulation that hinders their ability to grow.

“If you want to promote competition in the sector … then you need to make the environment more conducive for them to grow … the Bank of England has been quite draconian compared to other parts of the world,” said Lloyd Harris, lead credit portfolio manager at Merian Global Investors, according to FT.