French telecom company moves aggressively into the banking sector.
Orange, France's largest telecommunications company, is shaking up the country's banking landscape less than a year after launching its digital bank. With an aggressive, albeit costly, customer acquisition campaign that includes cash bonuses and cut-rate services, Orange Bank pulled in 100,000 customers during its first five months starting in November.
“Orange Bank is the first full bank to be launched by a CSP [communications service provider], going further than payment or wallet functionalities,” stated an analyst report from Gartner, a business research and advisory firm.
Developed in partnership with Groupama, a French insurance company, Orange Bank plans to expand shortly into Belgium and Spain, according to the Gartner report.
“The overarching theme is that carriers are looking for ways to develop new revenue streams to offset their declining communications and connectivity revenue,” says Elena Christopher, research vice president for Industry Research and Robotic Process Automation at HfS Research, an analyst firm. “Orange, leveraging its experience with mobile payments, has moved beyond simply partnering with banks to enable mobile banking. It has become a bank, thus diversifying its offerings in areas that complement and extend its core telecommunications business.”
At the same time, “banking is ripe for disruption,” Christopher adds. “Orange’s digital-banking offerings, designed for mobile delivery (a natural core strength for them), strikes a blow at traditional banks that are struggling to modernize their offerings and platforms. And unlike some digital-only banks, Orange still provides branch locations in the form of their retail stores.”
Like many CSPs around the world, Orange had already taken a stab at providing financial services, starting in 2014 in Poland. While Orange Bank takes the drive further, Orange must still overcome many of the stumbling blocks faced by its peers.
“The challenge, of course, remains in the ability to attract a base of clients that will drive adoption through a multitude of products beyond payments,” says Jimit Arora, partner at Everest Group, a management consultancy and research firm. “Trust has a huge role to play in getting clients to switch, and the success of such an initiative is a function of that trust versus the ease of use of competing products.”