Santander bank continues with a process of digital transformation that aims at ambitious objectives: to save 1,200 million euros. This saving will not affect the European markets, the executives say. Instead, it will give profitability for its expansion in Latin America.
Santander said it has a plan for the expansion of its digital bank, Open Bank, to 10 new international markets to reach two million new customers. To achieve this goal, it will invest 20,000 million euros in technology for four years.
Santander, aiming Brazil
Santander is betting everything in Brazil on achieving profitability in Latin America. Brazil is the biggest market that the Spanish bank now has. To maintain its presence in the South American country, Santander plans to sustain interest rates low in the loans it offers. In this way, it is expected to improve the return on assets above 20%.
Santander also expects to increase profitability in the region from 20% to 22%, goals that it has established thanks to the pace and sustainability of revenue growth.
Brazil is the Santander’s biggest market
Challenges in a less banked region
Latin America is a region with low bankization- the percentage of the population that uses banking services. The Global Index 2017 pointed out that only 54.4% of the elderly in the region have financial services. Although this represents an increase compared to 2011 and 2014, banking has slowed down in recent years.
Although these data indicate that there are still many possibilities for expansion, it also speaks of the reluctance of the population to use traditional banking, which will be an obstacle in Santander’s expansion plans.
Fintech industries have recently contributed to the banking penetration of Latin America. Countries such as Brazil and Argentina have attracted attention for their ventures such as digital banks or new payment methods. In Mexico, due to the low level of banking penetration, digital payment systems are being developed to increase financial inclusion.