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Santander merges digital bank and consumer finance unit

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  Published in Business and Finance on Wednesday, October 15th 2025 at 14:02 GMT by RTE Online
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Santander announced a strategic restructuring that brings together its digital banking arm and its consumer finance unit under a single, unified brand. The move, which is slated for implementation over the next 12 months, seeks to harness synergies between the two entities, streamline operations, and accelerate the bank’s push into the growing digital market in Europe and beyond.

Key Drivers Behind the Merger

The decision follows a broader industry trend in which traditional banks are consolidating specialist units to remain competitive against fintech challengers and pure‑digital players. By merging the digital bank—known for its mobile-first offerings and advanced analytics—with the consumer finance unit, which handles personal loans, credit cards, and installment products, Santander aims to deliver a more integrated customer journey. The company notes that combining data resources will improve risk assessment models, reduce loan default rates, and enable more tailored product recommendations.

A senior Santander executive explained that the digital bank’s technology platform has matured enough to support a broader product suite. “We’ve built a flexible, cloud‑native infrastructure that can scale rapidly,” the executive said. “Integrating the consumer finance portfolio will let us use the same technology stack for both retail banking and credit products, cutting duplicated effort and fostering innovation.”

Financial Implications

The merger is projected to save the group up to €150 million in annual operating costs by the end of the second year post‑integration. These savings stem from reduced staffing redundancies, consolidated data centers, and streamlined regulatory reporting. Santander’s CFO highlighted that the combined entity will generate higher cross‑sell opportunities; customers who open a savings account in the digital bank are expected to be more receptive to personal loans and credit cards, thereby driving higher overall revenue.

On the downside, the integration will require an upfront investment of roughly €300 million for technology migration, staff training, and marketing. The bank plans to finance the initial costs through internal cash reserves and a modest issuance of hybrid debt instruments aimed at investors seeking exposure to fintech‑friendly European banks.

Regulatory Landscape

The merger has attracted the attention of the European Banking Authority (EBA) and the Bank of England, as the combined entity will have a larger footprint in the UK market. Santander has already submitted the necessary filings and has received conditional approval from the UK’s Financial Conduct Authority (FCA). The FCA emphasized that the integration must preserve data privacy standards and maintain competitive neutrality in the retail banking sector.

In Ireland, where the digital bank’s headquarters are located, the Central Bank of Ireland has also given the go‑ahead, pending a detailed risk assessment report that the bank is preparing. The regulator will monitor the impact on consumer protection, particularly around credit terms and fee structures that may change as products are bundled.

Customer Impact

For existing customers of both units, Santander assures a seamless transition. Digital bank users will continue to access their accounts via the same mobile app, but will now receive access to a broader array of credit products directly within the platform. Meanwhile, consumer finance customers will be offered digital account management tools, enabling them to monitor balances, schedule payments, and track repayment progress in real time.

Santander has launched a marketing campaign titled “One Bank, One Experience” to explain the benefits of the merger. The campaign includes an interactive website that maps the journey from opening a basic savings account to applying for a personal loan, illustrating how the integrated platform offers faster approvals and lower interest rates.

Strategic Outlook

The merger positions Santander to better compete against fintech giants such as Revolut and N26, which have captured significant market share in the digital‑first segment. By consolidating its digital and credit operations, Santander can leverage its global network while offering a nimble, technology‑driven customer experience.

Industry analysts predict that the integrated entity could increase Santander’s market share in the European personal loan segment by 3‑5% over the next three years. Furthermore, the bank’s plan to roll out a new AI‑driven credit scoring model is expected to improve underwriting speed by 30%, reducing the time from application to approval.

Future Steps

The integration will be overseen by a dedicated task force comprising leaders from both units, as well as external consultants specialized in banking technology integration. The first milestone is the unification of back‑end systems, slated for completion by Q2 2026. Following that, a phased rollout of cross‑sell features will begin in Q3 2026, with a full launch of the combined digital‑consumer banking platform by early 2027.

As part of its ongoing commitment to sustainability, Santander also plans to use the merger to expand its green financing portfolio. By channeling digital platform revenues into renewable energy loans and ESG‑focused consumer credit products, the bank aims to reinforce its position as a responsible lender.

Overall, the merger represents a significant step for Santander as it recalibrates its strategy to balance legacy banking strengths with a forward‑looking, digitally‑centric model that promises higher efficiency, improved customer satisfaction, and stronger financial performance.