Orange Plans Bank Raid With AI, Digital Weapons
PARIS -- Orange Hello -- France's Orange has brought its keenly anticipated banking service out of the digital vault and into the open, revealing that new products available in France from July will include an AI-powered virtual assistant and other features aimed at improving the traditional banking experience.
Announced during Orange's annual Hello conference in Paris earlier today, the move follows the operator's takeover of a controlling stake in Groupama Banque last year and represents a dramatic leap outside the telecom sector and into a market it is confident it can disrupt. (See Orange May Become Bank With Groupama Takeover.)
Orange (NYSE: FTE) believes it can build market share and become a "primary bank" for consumers partly by combining the best of the physical and digital worlds, taking advantage of its own bricks-and-mortar presence as well as its mobile and online capabilities.
That means customers will be able open accounts by going into one of 140 "certified" Orange stores or through an Internet service, said Stephane Richard, Orange's CEO, during a glitzy morning presentation.
The physical footprint may strike some observers as relatively small given the size of the French market, but several features of the forthcoming service could make it stand apart from rival offers.
Those include a so-called "virtual assistant," powered by the Watson artificial intelligence (AI) technology from IT giant IBM.
Exactly how this works in practice remains to be seen, although customers should be able to communicate with the assistant from their mobile phones on a round-the-clock basis. And because the assistant will "learn" from its interactions with a particular customer, the service it provides should become more tailored and helpful the longer it is used.
Based on that understanding of an individual customer's needs, the virtual assistant should ultimately be able to offer proactive advice besides reacting to specific requests.
"It will be able to make forecasts about future payments based on past transactions and advise you to set money aside," Richard told conference attendees. "It will even understand emotions like stress and be able to respond as promptly and sensitively as possible."
It is clearly early days for such "machine learning" and the virtual assistant may at first struggle to live up to the full promise. Customers frustrated by it will be able to call on a human being for help, says Orange, although the operator's press release indicates there are as few as 100 such experts at its help center.
Further AI-based innovations are planned, however. "Tomorrow we will reinvent other ways of banking such as a predictive account management service or insurance for specific moments in time," said Richard. "We will do that by opening up the APIs [application programming interfaces] and working with startups."
Another pain point Orange aims to address through digital innovation is the "lag" that often occurs between a transaction and the proof of that in banking records. "Sometimes you have to wait days to see the transaction on your statement," said Richard. "With Orange Bank it will be truly instant -- even on bank holidays -- and we are the only ones to do that."
Customers will also be able to use online services to block or unblock debit cards that are misplaced and later recovered.
The banking service available from July will comprise an account, debit card, overdraft protection and interest-bearing savings account, with credit card and insurance offers set for introduction at a later, unspecified date.
Shedding further light on the technology details, Betrand Rojat, the deputy vice president of Orange's Technocentre R&D facility, told reporters that both Android and iOS handsets would support the new service. Customers will be able to carry out transactions using Apple Pay as well as Android-based NFC (near field communications) technology.
Orange is not disclosing any firm targets for the banking move but has previously indicated that next year it wants to generate about €400 million in revenues from all of its financial services -- including the mobile payment offerings it already provides in a number of African, European and Middle Eastern markets.
While the initial focus is on France, Orange plans to extend the banking service into various other European markets in future.
Deputy chief executive Gervais Pellissier told reporters that a service would not arrive in Spain before the second half of 2018, with Romania likely to get one "a bit sooner." Orange is also eyeing a service launch in the Belgium market at some point.
Before buying Groupama, Orange had entered the energy sector in Poland, and the banking move may prompt speculation about the operator's potential interest in other markets outside the telecom environment.
With the Groupama takeover last April, Orange gained a 65% share in a business then serving about half a million customers and with outstanding deposits of more than €2.1 billion ($2.3 billion, at today's exchange rate) and outstanding loans of about €2 billion ($2.2 billion).
But Orange evidently believes it can disrupt traditional bricks-and-mortar industries through digital innovation, much as Silicon Valley firms like Uber and Airbnb have been doing.
That means a lot is riding on the success of Orange Bank. The operator has previously claimed that a third of its customers in France, where it serves about 30 million mobile subscribers, have expressed interest in opening an account with Orange. If it could persuade that many individuals to use Orange Bank as their primary account, investors would really take note. (See Orange Claims Customer Interest in Bank Move.)
— Iain Morris, , News Editor, Light Reading