Share

Spanish banks seeks to address growing threat from technology firms

Santander has revealed plans to offer cloud services to corporate customers, in a bid to compete with large tech firms moving into the financial sector.

The Spanish lender is believed to have invested £230m in the construction of data centre in Leicester, primarily to store its own data, but also to sell extra storage capacity to small businesses.

The aim is to follow the success of technology companies - from Box and Dropbox to Amazon Web Services and Microsoft Azure - which have sought to tap into demand from businesses to store data more cheaply online.

“As a small business or private individual customer, where you lodge your information is something you should think about,” said chair of Santander, Ana Botín, in an interview with the Financial Times

“One of the things that banks have is trust and resilience and as you know with all the cyber risk that is incredibly important.”

Santander is not the first to provide cloud storage to customers. Barclays announced a service in 2013 that enables retail banking customers to store financial documents online, although Santander’s plans appear to go much further.

Related

According to Botín, the strategy is targeted at heading off the growing threat from companies outside of the traditional financial sector that are making use of new technologies, such as digital wallets and mobile payments.

A recent survey carried out on behalf of software provider Temenos highlighted growing concern among senior banking executives that large technology companies such as Google and Apple will provide greater competition in future.

“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,” said Botín. 

Offering excess storage capacity could make sense for other lenders too; the banking sector is traditionally one of the biggest investors in technology, with many spending billions on IT each year. 

However, customers may be wary of entrusting vital data to their bank. Following years of mergers and acquisitions, the hugely complex legacy systems owned by some have become unreliable and prone to outages - most notably the Royal Bank of Scotland's failed software upgrade which disrupted systems for weeks in 2012.

Image credit: Flickr/Mike Mozart