Banco Santander SA is preparing to launch a stand-alone digital bank in the U.K., amid intensifying competition in the market driven by digital startups, The Daily Telegraph reported May 12.
The stand-alone digital bank is expected to be launched within months and will focus on small companies. It is understood that the business will offer services beyond traditional lending, such as providing assistance on payrolls and pensions.
The Spanish banking giant is also considering bringing Openbank, its digital lending service, into the U.K. Openbank already caters to 1.3 million customers in Spain.
"We are working on a project to build an open digital financial services platform for [small and medium-sized enterprises]. We look forward to sharing more about the platform soon," a spokesman for Santander reportedly said.
The move comes as smaller banks look to tap into a £833 million fund earmarked by Royal Bank of Scotland Group PLC to boost competition in the British banking sector serving SMEs. Santander, which has roughly €300 billion in assets in the U.K. but is much bigger globally, has controversially been allowed to bid for a share in the fund.
RBS was reported in March to be working on establishing a stand-alone digital challenger bank and is said to have set aside tens of millions of pounds for the new digital platform.