The largest telecoms provider in France, Orange, is intending to make waves in the banking sector. This is after it faced a struggle competing against smaller rivals who were offering lower prices. Orange group is partly owned by the Government in France and is currently laying out plans to offer mobile banking to customers. They intend to do this by buying up to 65 per cent of Groupama’s , the French insurer, banking unit.
Orange has over 28 million customers and have said that a deal with the insurance group would allow them to move into banking services more quickly, as they look to launch Orange Bank by 2017. Orange didn’t say how much they would be paying for their stake in the business, but the deputy chief executive said that the company had held talks with three banks. Orange have chosen Groupama partly because banking was only a small part of their business.
The Deputy CEO said that the company was looking for ‘strategic alignments’ when it came to developing a banking strategy. He added that this is easier for them to do when banking isn’t a core part of the strategy of the business that they are purchasing from.
Groupana’s banking arm has over 500,000 customers and outstanding bank deposits of over 2 billion Euros by the end of 2015. The talks with the company solidifies Orange’s commitments to bring more diversity to its operations, particularly in mobile banking. As part of a strategic review last year, Orange’s chairman said that the group hoped to achieve 400 million Euros in revenues from financial services by 2018. Once established, the bank will offer traditional forms of banking services as well as loans, savings and insurance. It would expand to other areas of Europe such as Belgium or Spain. One of the aims of the bank would be to compete with the traditional French banks on pricing.
The Chairman said that in terms of strategy, ‘being leaner and lighter is key’. He said the group were planning to use their existing network of 850 stores throughout France. He also expressed confidence that the bank could sell mobile banking services to its existing customers. He said that the success lies in ‘pushing the right offer to the right customers’.
Orange already offers some financial services in the Middle East and Africa via their service Orange Money. They also recently launched Orange Finanse in Poland.
The Chief Executive of Groupama said that the combination of Orange’s ‘technological leadership’ and ‘ubiquity’ of mobile phones will enable them to move forwards to create a bank that ‘factors in all possibilities’.
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