French Telco Acquires Large Stake in Bank to Improve Financial Services

by Tristan Hugo-Webb 0

Telecommunications company Orange has announced it has acquired a 65% stake in France’s Groupama Banque as it looks to expand and improve its financial services offerings and potentially become a mobile based bank by 2017. According to the company, the new “Orange Bank” will start in France and will eventually move to Spain and Belgium where the telecommunications company has a strong footprint.

Thierry Martel, CEO of Groupama commented on the move by saying,

“We are working on a genuine Bank 4.0: once you have tried it, it will be difficult to do things any other way. 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.”

While there is little doubt that telco’s are moving increasingly into payments, the method in which they offer financial services differs significantly between providers. However there appears to be a global shift among industry participants to obtain banking licenses to improve payment and banking offerings whether through acquiring existing providers with banking licenses or obtain new licenses offered by regulators. Though the approach Orange has taken is more expensive it also means that it will not have to develop the necessary banking and payment infrastructure that new entrants must create and can come to market more quickly.

Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group

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