Financial Services

Orange Claims Customer Interest in Bank Move

Orange says one third of its customers have expressed interest in opening a bank account with the French telecom incumbent, which is planning a radical move into Europe's banking market next year. (See Orange May Become Bank With Groupama Takeover.)

The operator is in discussions to acquire a 65% stake in Groupama Banque, the banking subsidiary of French insurance giant Groupama, and plans to introduce a range of banking services in France next year under the Orange Bank brand.

Orange Bank launches in other European markets, such as Belgium and Spain, could soon follow.

"Surveys we've conducted show that a third of our customers are interested in opening an Orange Bank account," Laurent Paillassot, Orange (NYSE: FTE)'s deputy CEO of customer experience and mobile banking, told Light Reading's Telco Transformation site. "More and more people in France hold accounts at multiple banks, particularly young people, in a regulatory context that makes it easy to switch banks." (See Orange's Paillassot Banks on Groupama Move.)

Orange already provides mobile money services in some of its African and Middle Eastern markets, and has also launched a mobile banking application in Poland called Orange Finanse.

But a takeover of Groupama Banque and rollout of banking services in Europe could make it a threat to the established banking order, which has come under attack in some European markets for poor customer service and a lack of innovation.

Last year, Groupama Banque served around 530,000 customers and had outstanding deposits of more than €2.1 billion ($2.3 billion) and outstanding loans of about €2 billion ($2.2 billion).

Naturally, mobile banking is set to be priority for Orange Bank and Paillassot believes the operator can differentiate itself from traditional rivals by offering what he calls "cross-market" deals to its 28 million French customers.

The implication is that Orange may look to bundle a range of telecom services with its banking products in a further evolution of the "multi-play" model.

Hungary's Magyar Telekom plc (a subsidiary of Germany's Deutsche Telekom AG (NYSE: DT)) has made a similar move into the energy sector and now offers packages of telecom and energy services to its customers.

For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading.

Paillassot told Telco Transformation that Orange looked at proposals from a number of prospective banking partners but settled on Groupama thanks partly to the quality of its business processes and IT infrastructure.

The fact that banking is not Groupama's core activity also gives Orange more scope for developing a "disruptive banking strategy," he said.

At the same time, however, Groupama's existing banking agreement and reporting systems should help Orange to quickly overcome some of the regulatory challenges it will face on entering the financial services industry.

Even so, the launch of "cross-market" offers could put huge pressure on Orange's customer-service capabilities, forcing staff to address an entirely different set of demands.

Orange says it is looking at developing training plans in partnership with Groupama Banque. Important roles at Orange Bank could be filled by employees from either organization or from "external sources," says Paillassot.

Financial services form a key component of Orange's "Essentials2020" strategic plan to diversify its operations. Unveiled in March last year, that initiative sees Orange generating about €400 million ($437 million) in revenues from a variety of financial services by 2018.

For a full transcript of the interview with Laurent Paillassot, click here.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

COMMENTS Add Comment
Mitch Wagner 1/14/2016 | 4:54:19 PM
High interest rate As an American, I was startled and incredulous to see that 30+% of Orange customers are interested in banking with them. But then I read on. If France has a culture of people having multiple bank accounts and moving between accounts easily, then why WOULDN'T someone want to open an acount with Orange just to enjoy the benefits of mobile payments?
Sign In