Santander to offer cloud storage to corporate clients

Cloud storage part of broader strategy to keep Santander relevant as competition in banking hots up

Spanish banking group Santander is planning to offer cloud data storage to corporate clients as part of a strategy to fend off competition from new rivals in a range of traditional banking areas.

Santander will become the first banking group to leverage its reputation as a "trusted" organisation in banking in order to enter an unrelated area.

The strategy is being led by Ana Botín, who became CEO of Santander Group in September 2014, and is intended to help the banking group hold on to its corporate and other customers. The strategy will be led by Santander's technology company, Produban. "As I think how am I going to compete with all these new technology players, I can offer the same services as some of these big guys," Botín told the Financial Times.

Accenture forecasts that 20 per cent of consumer banking revenues will go to new rivals, while in areas such as payments - which are dominated by the biggest banking groups - margins are being slashed as a result of standardisation from measures such as SEPA, the "Single Euro Payments Area" - which is radically driving down the cost of cross-border payments in Europe.

In consumer payments, meanwhile, which have historically provided banks with a solid revenue stream, new entrants are expected to start making in-roads on banks' traditional monopoly, threatening not just their business in this area, but also MasterCard and Visa.

The introduction of near-field communications (NFC) has enabled a number of non-banking groups to offer their own alternative payments services, most notably Apple Pay, via Apple's popular iPhone, and the well-established PayPal, which dominates online payments.

Fifteen years ago, when public key infrastructure (PKI) cryptography was expected to become pervasive, banks were also touted as the logical trusted group as a certificate authority for holding people's and organisations' public keys. The theory was that banks, more than most other organisations, could be trusted to look after the public keys. PKI, however, died the death of complexity and indifference.

"Banks can't respond to market innovations as quickly as the newcomers and must change their market positioning over extended periods in many ways - look at Barclays Digital Eagles and Halifax's bespoke online service for children - Santander's offer of cloud storage is one shot in a long and complex campaign," commented TechMarketView analyst Peter Roe.