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Orange seeks banking partner for mobile financial services startup

Orange seeks banking partner for mobile financial services startup

French telco Orange is looking to find new investors for its loss-making banking startup.

The online bank was developed thanks to the acquisition of a majority stake in lender Groupama Banque. Groupama, a French insurer, now owns 22% of the group. Orange controls the remaining 78%.

In total Orange Bank has accumulated losses of €643 million in three years.

CEO Stéphane Richard told Les Echos that it was looking to find a banking partner with the right expertise and assets to help build up Orange Bank, and said several expressions of interest have been received.

"We are convinced that there are significant synergies between the banking world and that of telecoms," he says.

Orange had set ambitious targets for its mobile bank, with a business plan that sought to attract two million customers within ten years of launch and €500 million in net income by 2023.

The latest set of results put net income at €79 million from 1.2 million customers.

Comments: (1)

A Finextra member
A Finextra member 08 March, 2021, 07:28Be the first to give this comment the thumbs up 0 likes

Retail banking is a low margin business with very high admin costs due to constantly growing regulatory pressure. In marure markets where almost all people have one or more bank relations it is difficult tro break in as a new player. Thus the marketing costs also become high. All in a market where most consumers and small businesses expect to pay nothing at all for the banking services due to historic hidden business models based on float days on payments, interest spreads and currency conversion margins. The Euro took away a good part of the latter and two other revenue generators are due to both regulatory pressure and market forces almost gone. The newcomer or challenger banks struggle with adverse scale economies and find it hard to get ends meet even after multiple years in "launch mode".