The French telco group Orange revealed last week it had reviewed on its own banking operations and entered talks with a much larger banking group, BNP Paribas, with an aim to support its existing customers in France. The plan is that customers of Orange Banking will be transferred to BNP Paribas, if they choose. They will also look into financing solutions for mobile devices, and a possible takeover of Orange Bank in Spain.
Assuming the negotiations will go as planned between the two, Orange will moat likely be ending their short-lived era in the banking market.
Upon starting Orange Bank, it took a while to get off the ground, launching at the end of 2017. There was a steady flow of new customers, with an eventual 2 million customers by the end of 2022. Despite this, it was proven difficult for the company to make money and the expansion plans Orange had originally had never quite came to be. It originally aimed to turn a profit by 2023, with the firm pushing back its breakeven target. While Orange Bank succeeded in launching in Spain in 2019, it never elaborated on possible plans to expand to Poland, Slovakia and Belgium.
Orange Bank was a part of the vision of former chief executive Stephane Richard, but changes at the top and the entering of Christel Heydemann as the successor early last year brought a complete change in direction. The group later initiated a strategic review and thus Orange Bank is out.
”The evolution of the banking market now leads us to guide the bank into a new phase.
Our priority will be to provide exemplary support for all our employees and customers. This process will be carried out in complete transparency, within the framework of our dialogue with our staff representative bodies.”
Christel Heydemann, Chief Executive, Orange
Orange is going to have to tackle the countless consultation procedures it needs to follow with employee groups, and insists it will keep staff well-informed and seek to simply redistribute them within the group where possible. It also added its plans to work closely with the proper authorities and regulators.
As well as this, there’s no doubt customers will be concerned as to what will become of their loan or insurance services procured through Orange Bank. It’s clear that BNP Paribas have no interest in directly buying the Orange Bank customer base, instead offering alternatives to the customers and assisting with the transition over. Its Hello Bank digital banking service likely being the main destination for most.
”As a long-standing partner of the Orange Group and Orange Bank, we are naturally delighted to be able to provide a complete continuity solution to Orange Bank customers following Orange Group’s strategic choice to withdraw from retail banking.”
Thierry Laborde, Chief Operating Officer, BNP Paribas
While Orange are adamant on their leave from banking, the timescales of this happening are still very vague. Orange said it plans to ‘progressively withdraw Orange Bank from the retail banking market in France and Spain,” and has made efforts to point out how day-to-day banking won’t be affected.
It’s very clear that this process will take a long time. Retail banking within Europe is notoriously difficult- both to get into and to get out of.
