Orange has agreed to purchase a 65% majority stake in Groupama Banque. The sum of the deal has not been revealed but it is believed to be a clear indication of Orange’s intentions to enter the banking sector in France.
In France, Orange has 28 million mobile customers. The network said that the deal with Groupama Banque will allow them to launch Orange Bank, a mobile banking service, as early as next year. Alongside Groupama Banque, Orange hope to win over 2 million banking customers before taking the company to Belgium and Spain. The chairman and Chief Executive of Orange, Stephane Richard, said that the acquisition of the majority stake was a ‘major step forward’ in the company’s ambitions to diversify mobile banking services, eventually bringing it into a ‘new dimension’. Meanwhile, the chief executive of Groupama said that the deal would allow them to take advantage of Orange’s technical knowledge and expertise in digital services.
The deal comes just short of a month after Orange failed to enter into an agreement with Bouygues Telecom over an acquisition which would have allowed them to take over the telecoms market. French banks are also facing pressure from their investors to use more new technology and cut costs. French bank Société Générale said last year that they would be closing 20% of their branches by 2020- big cuts aren’t usually an occurrence in France- and they were rewarded with an increase in their share price. In France, shutting branches can be difficult as firing staff is frowned upon and it is seen as being a good citizen to keep local branches open. As a result of this taboo, France has one of the highest branch per capita ratios within Europe, with six branches per 10,000 people- three times what it is in the UK.
Orange and Groupama believe that their partnership will give them plenty of opportunity to disrupt the banking sector. In 2012, the network suffered in its own market when low cost carrier Free entered the telecoms sector.
According to Orange, the new service will include current accounts, loans, savings, insurance and payment facilities. The service will be a digital channel designed for mobile phones, but using Groupama Banque’s banking licence and existing customers-an amount which totalled £530,000 last year. Already, Orange has experience with payment services as it launched Orange Money in the Ivory Coast in 2008. The service allows customers to pay their bills and transfer money- it now operates in 14 countries and has 18 million customers.