The project is still confidential. Orange has started a reorganization of its banking activities in recent weeks, has been informed The world. With two objectives: to simplify Orange Bank’s IT system and then implement mobile banking in Europe, outside the two current markets, France and Spain. For example, Orange Bank could be added to the operator’s telecom activities, in Poland, Belgium or Romania. Orange does not comment.
“One Bank”, the code name of the project submitted to the staff representatives of the bank, provides for the merger of Orange Bank France and the Spanish branch opened at the end of 2019. The risks of back office, IT and management activities would thus be bundled . This would lead to a workforce reduction of about thirty people, of the 820 currently in the structure, solely by not replacing natural leavers, a source points out. The new IT platform is in the development phase. Thirty million euros in savings are expected.
Accumulation of losses
A new direction of development would use this organization to launch financial services in other European countries, hoping to generate more net banking income at marginal cost. “This project should make it easier for Orange Bank to break even”assures a source.
Launched in November 2017 in France, after the acquisition of Groupama Banque in late 2016, mobile banking has always lost money. In five years, Orange Bank has accumulated nearly 800 million euros in net losses, forcing the controlling shareholder to return to the pot every year. In 2021, Orange has subscribed to a capital increase of 300 million euros, on top of the 637 million euros contributed between 2017 and 2020. The operator hopes that its financial institution will reach operational equilibrium by the end of 2024. That assumes to absorb another three years of losses.
The company has just over 1.4 million individual customers in France and Spain, “almost all of whom” have subscribed to the paid offer.
Orange now has free rein to launch this project. In October 2021, the operator bought the minority share of 21.7% that Groupama still held. The two partners were no longer on the same wavelength: Orange criticized the weight of the IT platform inherited from Groupama Banque and the insurer did not want to finance its partner’s European ambitions. As the only master on board, the telecom operator hopes to revitalize its bank by interweaving it more with telecom activities, such as managing its loyalty programs, which is not necessarily seen well by the operator’s commercial teams. This new shareholding will also simplify the transfer of costs between the network of Orange stores and the bank, while the latter should serve as a commercial argument to win or retain telephone customers by, for example, credits to buy a smartphone†
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