Apple and Google are big but banks have advantages, says Santander boss

Chairman of Spanish banking giant Santander is confident banks can fight off the challenge in financial services from tech giants

The chairman of Spanish banking giant Santander is confident that banks can fight off the challenge in financial services coming from the world's technology giants.

In an interview with the Financial Times, Santander chairman Ana Botín said the bank is investing in digital technologies but is not soley focused on that, with traditional banking services such as those provided in branches key to banks staving off competition from internet giants.

She said Apple, Facebook, Amazon and Google are genuine threats to banks. “If you think about the big guys now, it is not the banks, it is these four large tech companies that are worth more than us. They have more cash. They have less regulation,” Botín told the Financial Times.

But she said online services are not for everything and banks should remain focused on traditional services such as in-branch consultation. 

“At important times in your life, you want to see a person,” said Botín. “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 insisted bank branches have value, even if far fewer people are visiting them. “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 the tech companies don’t have,” Botín added. 

Santander has 14,000 branches in the UK, US, Latin America and continental Europe.

She also claimed people were more likely to trust banks with their data than the tech groups: “I think you are very safe with us in terms of your information. But I’m not sure how safe you are with those big guys.” 

This view is supported by recent research from Bizrate Insights. The study of more than 6,000 people found that 72% of respondents trust their bank with card details. In comparison, 45.4% trust Amazon, 21.4% Apple and 12.9% Google.

But a simple web search reveals the scale of customer bases of banks and their challengers. PayPal has 157 million active users, which is more than most banks, while Facebook has more than one billion users and holds a lot of sensitive data. Meanwhile, Amazon boasts more than 244 million users.

In comparison, Santander has 107 million customers, Lloyds Bank has 30 million, HSBC has 52 million and Barclays has 48 million.

Santander has a €3bn annual IT budget and Botín said it has the resources to stay ahead.

“I don’t think of us as defending ourselves against the four big guys. I think of us as a challenger. An attacker,” she said.

Santander has invested heavily in IT and has used it to its advantage. It uses a standard in-house-developed banking platform, known as Partenon. 

The bank has been on an acquisition spree in recent years, expanding across Europe. In the UK, it acquired Abbey and Alliance and Leicester, for example. Its strategy is to move acquisitions onto its Partenon IT platform to cut costs and improve efficiency.

But could Botín be underestimating the competitive threat facing big banks. The combination of new banks and technology companies offering peripheral banking services will inevitably eat into bank revenues.

One banking source said financial services in the future will become a very large number of smaller specialists that customers can compare easily online using services similar to moneysupermarket.

“The days of having multiple products with one firm may be over soon,” he said. “I believe people will increasingly select individual products from different firms. A current account here, savings over there and a credit card somewhere else.”

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