At an analyst and media event on 23rd January, Orange restated its ambitions to expand Orange Bank beyond France to all countries of operation by 2025.Orange is targeting break even in Europe by end of 2023, with 5 M customers and around €400 M in net banking income. As highlighted in Engage 2025, Orange Bank is one of three key components of Orange’s multi-service operator strategy in Europe.
Strategy Analytics’ Take
Orange Bank’s target of 5 M customers appears ambitious. In France, Orange Bank has acquired over 500K customers over 2 years, the equivalent of over 2% of its mobile customer base. In context 5 M bank customers is the equivalent of around 7% of Orange’s current mobile base across Europe, which appears a modest target. Orange expects to tap into the growing use of mobile devices to access to banking services, while leveraging its existing retail stores to drive awareness and provide support to Orange Bank customers – which in some ways is ironic given its mobile bank positioning. On the product side Orange believes device financing, cashback, and banking services targeted at professionals and small businesses will drive subscriber growth. For example, Orange bank launched in Spain in November 2019, offering a free checking account, what it claims as the most competitive interest rate, and a €30 discount on for Orange mobile or converged service subscribers on their next bill. However, will these features be enough to attract new customers at scale? Orange’s effort in financial services also raises additional questions which need to be addressed by telcos with similar ambitions:
- Given the potential synergies highlighted above, should other telcos be following Orange’s financial services lead by launching their own bank?
- MNOs have succeeded in providing financial services to the unbanked and under-banked in emerging markets. However, in countries where banking is established, how easily can telco brands stretch into banking and financial services?
- What account features or product bundles would motivate different consumer segments to switch from established providers of banking services to telcos or other new entrants?
Strategy Analytics will continue to monitor the progress of Orange and other service providers targeting synergies and diversification through banking and financial services.