Banco Santander intends to use a combination of old-school bank branches and a $3 billion global IT budget to beat off competition from cash rich technology companies intent on invading its territory.
In her first interview since taking charge of the giant Spanish bank, Ana Botin told the FT that the she is closely monitoring the activities of the big four consumer tech companies - Apple, Facebook, Google and Amazon - who have more cash than the banks and operate under a less onerous regulatory regime.
Contrary to perceived wisdom, Botin believes that the banking industry’s large branch networks give traditional financial services firms an edge over their deeper-pocketed competitors.
“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,” she told the FT. “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 groups] don’t have.”
Botin is no digital naysayer. In her previous role as head of Santander UK she set up a $100m fund to invest in financial technology start-ups. She says her aim is to put banks at the forefront of digital innovation as trusted safekeepers of customer data, playing to consumer fears over privacy and digital eavesdropping.
The bank has set a target of moving 45% of its customers to online banking channels over the next two years from a current base of 28%. According to a results presentation delivered to analysts today, digital customers are considered 2.6 times more profitable than regular users.
“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?” she asks. “Those are my three building blocks and if you think about it, digital comes into it in every single one of them.”