Anyone looking at the homepage of Banco Santander’s websites in Spain and Mexico could be forgiven for thinking that the digitalization of banking in emerging and developing markets is homogenizing banking models. They might even question the notion of distinct emerging market banking as still ‘a thing’.
According to Carlos Rey, Santander’s regional head of South America, this would be a mistake. Consumer and corporate banking in emerging markets is still a very different proposition to that in developed markets.
“The businesses are very different in the sense of volumes, of growth and interest rates,” he says, adding that it is by far the macroeconomic differences that create challenges. Penetration of banking and credit is lower in emerging markets and, while this brings opportunity, the risks and the strategies to grow new segments and blend portfolios for optimal risk-adjusted return are complex.
Rey argues that the bank’s success in the emerging markets of Latin America – Santander has the largest banking franchise in the region – has been the product of its ability to operate locally with the depth of a domestic bank, while optimizing the advantages of its global network.