How Verizon figures into Santander’s U.S. growth plan

Santander Bank is continuing to sketch out its U.S. growth strategy, building on the launch of its nationwide deposit franchise last year.

On Tuesday, the U.S. arm of Spanish banking giant Banco Santander announced a multiyear partnership with telecom powerhouse Verizon. The deal allows eligible Verizon customers to open a high-yield savings account through Santander’s nationwide digital bank Openbank, providing the bank with a new pipeline for adding customers.

If depositors maintain an average daily balance of at least $1,000, they will be eligible to earn as much as $180 a year in credits toward their Verizon mobile and 5G home internet bills.

The bill credit is based on average daily balances. Customers will get up to $5 a month for balances of $1,000 to $9,999.99, the bank said. The monthly credit rises to $10 per month for balances between $10,000 and $29,999.99, and to $15 per month for balances of $30,000 and above. The offer is valid for up to 12 consecutive months from the account-opening date.

The partnership, which is the first of its kind for Santander in the United States, is the latest step in the company’s ongoing efforts to expand its scale stateside and become a leading digital bank. In October, Santander launched Openbank as a way to gather more deposits to fund its U.S. auto lending business, and it continues to lean heavily into being “a digital bank with branches.”

The opportunity to tap into Verizon’s massive customer base is a big win for the bank as it continues to collect deposits beyond its existing nine-state, 400-retail branch franchise. As of December, Verizon’s consumer group had 115.3 million wireless retail connections and 10 million broadband connections, according to a fact sheet posted on the company’s website.

“The Verizon partnership is a significant milestone for Santander as we scale our U.S. business,” Ana Botín, executive chair of Banco Santander, said in a press release. “This is an important step in our growth strategy and I am excited for what’s ahead.”

Santander Bank, which is based in Boston and employs about 12,000 people in the U.S., has been in transition mode. In late January, Banco Santander named Christiana Riley as CEO of its U.S. operations, including the retail bank and Santander Consumer USA, which provides auto loans. Riley, a longtime Deutsche Bank executive who joined Santander in 2023 as its regional head of North America, succeeded Tim Wennes, who departed the company.

A year ago, Santander hired Swati Bhatia, former head ofGoldman Sachs’ digital brand Marcus, to oversee its consumer and business banking business, as well as its digital transformation efforts.

Openbank is expected to play a big role in the company’s U.S. growth strategy. In addition to the high-yield savings account, which requires a minimum of $500 to open, the digital bank will begin offering certificates of deposit and checking accounts later this year, according to the release.

Earlier this month, total U.S. deposits in Openbank topped the $3 billion mark, the company said.

Like the existing Openbank high-yield savings account, the new digital “Verizon + Openbank Savings” account will pay generously for deposits, offering an interest rate of 4.40%.

Starting in April, Verizon customers can sign up for the account on Verizon’s website or by using the MyVerizon app. Customers will be redirected to the Openbank website to finish the account registration process and then will be able to use the Openbank app, the bank said.

Verizon Prepaid, Verizon mobile Business, Verizon Fios and Verizon Fios Business accounts are not eligible for the Verizon + Openbank Savings account.

Hans Vestberg, chairman and CEO of Verizon, said in the press release that Verizon’s “scale enables the creation of exclusive financial services solutions and savings accessible only to Verizon customers.”

The partnership appears to be unique in that it involves a telecom company, said Aaron McPherson, works in the payments and fintech markets as principal of AFM Consulting.

“This is kind of new,” McPherson told American Banker. “We haven’t seen a telecom company do this, and it’s pretty innovative for Openbank” as well.