The banking subsidiary was a central plank of former CEO’s diversification strategy
Further evidence of Orange’s new group CEO, Christel Heydeman, making her mark is that the operator told Reuters it is looking at “all opportunities” regarding ownership of Orange Bank.
This was after the French financial newspaper, Les Echos, reported Orange was looking to sell its loss-making banking arm. The newspaper also said that Orange Bank has 2.6 million customers and has lost €880 million in the past five years.
An Orange spokesperson told Reuters: “In a very highly competitive environment in the banking market, Orange is considering all opportunities to develop Orange Bank’s activities and support its growth”.
Original thinking
Stéphane Richard, then Orange’s group CEO, announced its banking ambitions to great fanfare, launching Orange Bank in France in November 2017.
He saw the banking sector as staid and ripe for disruption, and said research had shown a third of Orange’s mobile customers in France – about 9 million – were interested in becoming banking customers too.
The rationale was that many people used banking apps on their phones so being a bank itself made sense as part of the drive to open up new revenue streams as core sources of income, such as phone calls and texting, are eroding.
Orange bought a majority stake in Groupama Banque in 2016, itself the banking arm of an insurance firm, which at that time had about 500,000 customers.
By the end of 2019, ambitions had been trimmed to serving nearly 5 million customers – across France and Spain – by the end of 2023.
Swirling spectulation
Reports surfaced last year that Orange was looking to sell some or all of its stake in Orange Bank last year when BNP Parisbas was seen as a possible buyer or investor.
Although also in 2021, Orange upped its stake in Groupama by 21.7%, to add to its original 65% holding.
It might not have made the subscriber numbers it once hoped for but it did slow churn in the ferociously competitive Spanish market and double the spend of French customers who opted for its banking services.
Changing bank can have a profound effect on your credit score it has long been an aphorism in the UK that people are far more likely to get divorced than change bank and perhaps this has proved true in France and Spain.