The banking industry’s best kept secret

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Image by gwydionwilliams via Flickr

If you can overlook the retina-burning red of their website, and if you can get past their awkward stock symbol (STD), you’ll be surprised to discover Global Santander as an impressive organization and the banking industry’s best kept secret.

Santander is the largest bank in the world in terms of bank branches (they have 14,000) and they are the third largest bank in the world in terms of assets (they have $1.5 trillion). They’ve been around since 1857. They seem to be well defined in terms of what they do and how they communicate it. Their mix of geographic markets and demographic markets minimizes their risk.

So, why haven’t most people heard of them? Well, for one, their focus has not been on US and Canada: They have branches in Europe and Latin America. Latin America has money but doesn’t make economic headlines. (Well, that’s not entirely true: Brazil is the “B” in the BRIC acronym). I’d also suggest that companies that do make headlines lately are ones that are having a rough time in this economy, while a company like Santander has been around for 150 years and just continues to plug away at what it does well.

There’s some interesting potential here for them to grow. In a time when banks are imploding and financial confidence is weakened, a strong company like Santander can come in and make strategic acquisitions. It’s a cheap way to gain fast marketshare. And they already have a North American presence: They’re in Mexico and they have some regional presence in the US with an American bank (Sovereign Bank) and a financial company (formerly Drive Finance now Santander Consumer).

Consumer concerns over “foreign ownership” are a potential threat but they can be addressed with regional, co-branded marketing (on a similar but larger scale to what they are doing at Sovereign Bank and Santander Consumer). Or, they can accomplish it in the same way that the Toyotas and Hondas and Nissans have done it (quite successfully) with heavy investment in communicating that they do business locally.

If I were to recommend how they might gain further entry into the North American market, this would be my recommendation:

  1. Start marketing right now. Before you do anything else, flood the market with a bunch of marketing on the size and stability and competitive advantage of Santander.
  2. Then, in the US, buy banks. They’re cheap. Pick up some regional banks. Put together a co-branded package to *slowly* switch XYZ bank to XYZ bank by Santander. Make “by Santander” or “backed by Santander” a key part of your co-branding. In Canada, use the bankless PC Financial model (which places kiosks in Loblaws grocery stores). There are other places people shop. (Does Walmart have a bank? I can’t remember. The one near my house doesn’t).
  3. Start making in-roads into other countries. (They are in Russia, the “R” in BRIC). I think they could make some ground in India, the Philippines, and they might even have the chops to fill the financial services vacuum in Africa.

ING Direct is another good example of a foreign company doing a good job entering the US & Canadian market. If Santander is looking to make headway into the US/Canadian market, now is the time to do it. They have money, they have sound policies, they have a strong brand, and have little exposure to the mortgage poison that has put many banks on shaky ground.

In terms of the Business Diamond Frameworkâ„¢, all four Function Diamonds are really strong: Their Leadership Diamond has a clear focus and game plan; their Value-Add Diamond has won the trust (and the $1.5 trillion in assets) of Europeans and Latin Americans; their To-Market Diamond articulates clear benefits to their current market; their Support Diamond has made helped them to grow consistently over 150 years. Now, in my opinion, it’s time for them to take it to the next level and become a truly global organization.

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