Financial Services

Orange May Become Bank With Groupama Takeover

France's Orange has revealed it is in negotiations to acquire a 65% stake in Groupama Banque and set itself up as a fully fledged bank offering savings, loans, insurance and other financial services.

The operator has entered into negotiations with insurance giant Groupama, the owner of Groupama Banque, about a possible takeover. It plans to launch banking services in France -- under the Orange Bank brand -- in 2017 before rolling them out in other European markets, such as Spain and Belgium.

The initiative clearly ties in with Orange (NYSE: FTE)'s "Essentials2020" strategic plan to diversify its operations. Under that program, unveiled in March last year, Orange aims to generate about €400 million (US$431 million) in revenues from financial services by 2018. (See Eurobites: Orange Plans €15B Networks Upgrade.)

That target looks relatively modest -- Orange last year made about €39 billion (U$42 billion) in revenues across its various international markets -- but the move into banking would take Orange into new and unfamiliar territory.

Orange is keen to develop a mobile offering through the tie-up with Groupama and believes its network assets, retail presence and brand will aid its expansion into the banking sector.

Groupama, meanwhile, has expressed interest in strengthening its online banking business by developing a "new banking model" in partnership with Orange.

The French telecom incumbent already offers mobile money services in Africa and the Middle East and has also launched a mobile banking application called Orange Finanse in Poland.

Last year, senior executives flagged interest in expanding mobile money services into other countries outside Africa, but an acquisition of Groupama Banque would see the operator enter a much bigger financial services market. (See Africa's Data Dilemma.)

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Other than by developing a mobile banking offering, Orange has yet to indicate how it plans to differentiate its banking services from those of longer-established rivals.

By setting itself up as a bank, Orange will also become subject to new regulatory oversight amid post-2008 concerns about the risks that financial-services companies pose to the wider economy.

Groupama offers a range of insurance services in 11 countries, including France, and last year claimed to serve about 13 million customers.

Its Groupama Banque subsidiary -- which Orange could eventually acquire -- had more than 530,000 customers, outstanding deposits exceeding €2.1 billion ($2.3 billion) and outstanding loans amounting to around €2 billion ($2.2 billion) last year.

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

Mitch Wagner 1/6/2016 | 11:58:12 AM
Re: Transformative move This is an idea that looks crazy at first. "Whaaaaaaa..... ?!" What does banking have to do with telecom?

But thinking about it further, it's brilliant. Orange is already in the financial business, with mobile payments. 

Finance these days is just moving information around a network, which a comms company already does. 

And comms companies already have expertise in doing business in a highly regulated vertical. 

So maybe this is where all telcos and other comms end up. The ones that survive at least. 
danielcawrey 1/5/2016 | 12:57:38 PM
Re: Transformative move Despite the possible regulatory implications, this is a good move. Mobile banking is set to become a very hot business in the next decade. 

The idea of branch-based banking is going to fade. People are going to do all of their financial services on a phone. It makes a lot more sense, doesn't it?
iainmorris 1/5/2016 | 10:18:42 AM
Transformative move This would be a radical step for any operator but new banks have materialized in the last few years and Orange clearly feels that its current assets give it an opportunity to prosper in this sector. The big questions will be what unique services does it plan to offer as a bank and how big a part of the overall Orange business could banking ultimately become.  
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