Orange, France’s biggest telecoms operator, has entered exclusive negotiations with the French insurance group Groupama to buy up to 65% of its banking unit. According to reports, the telecoms group wants to expand quickly in the mobile banking sector when it launches Orange Bank in 2017.
The telecom group, which is partly owned by the French government and has more than 28m customers, said in a statement that a deal with the French insurance group would allow it to push into banking services more quickly as it looks to launch Orange Bank in France in 2017.
As part of its strategic review last year, Stéphane Richard, Orange’s chairman and chief executive, said the group aimed to achieve €400m in revenues from financial services by 2018, according to the Financial Times newspaper.
Once established, Orange Bank will offer standard banking in addition to savings, loans and insurance services in France and would then enter other European markets such as Spain or Belgium. Groupama’s banking arm has around 530,000 customers.
The news will serve as a warning call to big primary insurers who are already nervous about their distribution strategies and the potential for “connected” companies to disrupt the traditional insurance business model.
Orange already offers financial services in the Middle East and Africa via Orange Money and, more recently, with the launch of Orange Finanse in Poland.
In a statement, Thierry Martel, CEO of Groupama, said: “Orange’s know-how and expertise in robust digital systems will enable us to go beyond online banking applications that are currently available on smartphones in order to transform users’ mobiles into a virtual bank and insurance branch that is always at hand… Our two leading brands, which have always been pioneers in our respective markets, are joining forces to create a ground-breaking innovation in the financial sector. We are very proud and happy.”