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Santander latest traditional player to open digital bank
Santander is the latest traditional bank to follow an industry trend and develop a digital banking unit
Santander is planning to launch a digital-only bank in the UK that will serve small businesses with traditional banking services as well as some business services.
The business banking service will be a standalone business that will also offer small businesses payroll and pensions, according to a Sunday Times report.
A spokesman for Santander told the newspaper: “We are working on a project to build an open digital financial services platform for SMEs [small and medium-sized enterprises]. We look forward to sharing more about the platform soon.”
Traditional banks are devising strategies to fend off competition from a new generation of banks that are fuelled by the latest technology to reduce operating costs and provide customers with a high level of service anytime and anywhere via computing devices, particularly mobile.
The Royal Bank of Scotland (RBS) is a good example. According to reports, RBS is spending tens of millions on a potential digital bank that will be run separately from its existing business.
Virgin bank, already classed as a challenger bank, has spent more than £38m on setting up a digital bank to target a broader segment of the financial services market in the UK.
It said a platform underpinning the new bank will harness data to offer customers personalised accounts.
Read more about banks setting up separate digital arms
- Virgin Money is setting up a digital bank to expand into the current account and SME business account markets.
- The Royal Bank of Scotland (RBS) is planning to establish a digital bank that will be run separately from its existing business, according to reports.
- German digital challenger bank Fidor has been acquired by French banking group BPCE, which is accelerating its digital transformation.
Meanwhile, in France BCPE, another traditional mainstream bank has taken a similar path, but has acquired an established digital challenger rather than build one from scratch. BCPE acquired German challenger Fidor, which was set up in 2009 and gained a UK banking licence in 2015.
Banks have been watching the fintech industry grow, and many are partnering with fintechs and even taking stakes in them. Some have startup programmes, in which they help fintech startups to develop their products.
