Orange set to disrupt banking industry with Groupama partnership - analysts

France's Orange unveiled plans to create a mobile-only bank under its own brand in what analysts described as a potentially disruptive move for the banking industry.

The telecoms operator opened preliminary talks with France-based insurance company Groupama over a partnership that could ultimately see the operator acquire a controlling 65 per cent stake in Groupama Banque as part of a push into mobile banking.

The operator said it had entered into exclusive negotiations with Groupama with a view to forging a partnership that would power the launch of Orange Bank in France in early 2017. Orange said the service would be fully mobile and would offer access to traditional banking services including savings, loans and insurance.

Orange CEO Stéphane Richard said the company would utilise its "unique combination of essential assets" including its strong brand and "solid distribution network" to launch a "highly innovative, 100 per cent mobile bank."

Richard noted that Orange has already successfully launched mobile financial services including Orange Money in the Middle East and Africa, and Orange Finanse in Poland.

"Our partnership with Groupama, which has recognised expertise and key assets in the areas of both banking and insurance, will enable us to accelerate the implementation of our strategic ambition to be able to offer our customers Orange Bank service in France from the beginning of 2017."

Orange plans to expand Orange Bank into other European markets such as Spain and Belgium as part of a broader push to generate €400 million ($429 million) in revenues from financial services in 2018. That goal forms part of the company's Essentials2020 strategic plan announced in March 2015, which called for Orange to leverage its assets to become a player in the mobile banking business.

John Delaney, associate VP for mobility at research company IDC Europe, noted that Orange's plan to enter the banking sector will put it in competition with established banking groups that the operator has partnered with to launch services including Orange Cash.

However, Delaney appeared bullish about the move, stating that IDC Europe expects "Orange to enter the French banking services market as a disruptor: a mobile-only bank taking a new approach that is more in tune with the increasingly mobile-centric way in which people live their lives."

Indeed, Delaney said Orange could quickly become the "Uber of banking" with its mobile-only approach, referring to the app that has shaken up the traditional taxi industry in many global markets.

Groupama CEO Thierry Martel said a partnership with Orange would enable his company to push beyond its current smartphone-based online banking services. Orange's technological expertise could allow the company to turn smartphones into a "virtual bank and insurance branch that is always at hand," he said.

For more:
- see this Orange announcement
- read IDC Europe's comments

Related articles:
Orange, Bouygues Telecom confirm preliminary merger talks
Gartner: 50% of consumers in mature markets will use smartphones or wearables for mobile payments by 2018
Mobile money usage drives financial inclusion in Rwanda and Ghana
French mobile operators invested €2.2B in networks in 2014, but rural challenges remain
Orange beefs up top management with 2 key appointments

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