It will be Santander’s Amazon to its bricks-and-mortar Walmart. Spanish digital bank Openbank is rapidly turning from a Santander backwater to an initiative at the forefront of the group’s global strategy.
“We call it the blueprint for the future of Santander bank,” says Openbank’s chief executive, Ezequiel Szafir. “As a vehicle to develop that blueprint, it’s faster and lower risk and nimbler to develop.”
Launched in 1995, Openbank previously offered little more than a current account and a debit card. But its reboot last year came with an entirely new cloud-based IT system, as well as credit cards, mortgages and robo-advisory.
“The blueprint can’t just be a cool app and a debit card, but a full bank, fully regulated, playing by the same rules that big banks play by,” says Szafir.
After what Szafir describes as “an incredible first year”, Openbank has already almost doubled its customer numbers to more than a million and it is profitable. However, possibly more important in the longer term is that Openbank’s new system could be the germ of a successor to the main bank’s Parthenon system: a pilot for a back office that might be worthy of a bank like Santander, with 133 million customers in 10 countries. It could be even more easily transportable than Parthenon.
I hope we are building the Parthenon of the future, one which will look very different but just as reliable, international and hopefully as long-lived- Ezequiel Szafir, Openbank
There are no concrete decisions yet, either on the use of the system or on where Openbank might expand. But it is readying its international expansion, both in terms of transferability of the platform and its interaction with financial supervisors in Europe and the Americas, including an application for its EU passporting rights.
Even where it does not have a large market share, Santander’s banking operations across Europe including France, the Netherlands and the Nordic countries – and in Latin America in Colombia and Peru – could be broadened via Openbank. In some of these countries Openbank could gather deposits to fund the local consumer lending it now funds through wholesale markets, as in Germany.
Last decade, Santander built its reputation as an international retail bank by seeking to reap synergies from the banks it acquired – including those outside Spain and in particular Abbey National – through the use of Parthenon, which was originally Banesto’s IT system. At the very least, Openbank’s system will ease the burden on Parthenon as Santander’s growth continues.
“I hope we are building the Parthenon of the future, one which will look very different but just as reliable, international and hopefully as long-lived,” Szafir says.
A former journalist and a fan of cars, Szafir compares Parthenon to a 1967 Chevrolet pick-up: in use every day for decades but costing more and more to maintain.
By contrast, Openbank is a much newer, smaller and more fuel-efficient vehicle: with air-conditioning, electric windows and seatbelts.
It is not just that Openbank is fully digital, internationally transportable and based on the cloud, however. Szafir also sees it as a blueprint for Santander’s future in other ways: in its use of artificial intelligence and machine learning for commercial, risk and anti-money laundering processes; in its development of open-source systems to allow it to become a bank of banks; and in its distinct culture and talent profile.
About half of Openbank’s 130-odd staff are younger tech people, not bankers. For example, its Argentina chief executive Federico Procaccini, who is effectively spearheading Openbank’s Americas strategy, was previously at Google and Argentine e-commerce firm Mercado Libre.
“We look and feel like a tech company doing banking,” says Szafir.