Orange Bank was a complicated case and he knew it

Free had pushed him to reinvent himself and spill over into the banking world. A gap that is more of a skid today. Five years after the launch of Orange Bank in 2017, its outgoing CEO Stéphane Richard confided in an interview with Capital. Six months after leaving office, he recognized the difficulties in the environment. “I may have overestimated our chances of success” he admitted. The banking establishment now has 1.5 million customers. In the future, it will be necessary to find an “ally”, condition sine qua non its fate will certainly be the same as that of ING France.

For the occasion, our colleagues from Capital recalled the history of the banking project of the French telecom operator. From what to learn that to encourage customers to open accounts, salespeople were paid higher bonuses. With the 300 approved stores, Orange will have had 80% of its Orange Bank customers subscribe to physical stores. Too large a share for an online bank focused on digital, and which insinuates a certain glass ceiling once all telecom customers have been offered a banking offer. At the competition, the hybrid model between physical and digital succeeds especially at the Nickel Account.

Speaking of competition, the French digital banking market is showing some cruel consolidation. Boursorama Banque took off and took the opportunity to swallow an aging ING. BforBank is stagnating, and Hello bank! – despite a very competitive offer – is progressing at a much slower pace. Le Compte Nickel has staked everything on an ultra-accessible offer in terms of price, account opening conditions and proximity (via tobacconists). Orange Bank could have signed with Boursorama Banque in 2016, confided Stéphane Richard, but preferred to leave control of its capital to Groupama, which then renamed its bank Groupama Banque to Orange Bank.

“A designated and risky entrepreneurial project”added Stéphane Richard to Capital remembering history. The setbacks at the launch could not give the necessary impetus for a project of such magnitude. Our colleagues recalled that Orange Bank had experienced many bugs at its launch and that many new customers had subscribed to an account for the sole purpose of recovering 130 euros in welcome bonus. As a result, as of 2018, losses widened to 169 million euros. This will be followed by losses of 185 million in 2019, 195 million in 2020 and 160 million last year. In the first half of this year alone, they already reached 80 million euros.

No matter the cost

Just a month ago, an exceptional bonus program of 140 euros arrived to boost the number of account openings. Orange Bank added several conditions this time, namely to make 10 purchases or withdrawals, while direct debiting its direct debits linked to an Orange subscription (mobile or internet plan). A strategy still linked to the telephone operator and welcome bonuses, which should not help the health of the establishment. Since the beginning of the year, 600,000 new customers have opened an account, but these are still not profitable. Definitely for a primary or secondary account issue.

In 2020, lemon squeezer also pointed out that the census of customers at Orange Bank was not representative of the reality of online banking customers. In fact, she was adding mobile insurance records to her accounts overnight. In all, 600,000 new customers entered Orange Bank accounts artificially, for very low profitability. It would be preferable that these customers have signed up for a mortgage, for example, but the product has not yet arrived. He could present himself as the wild card before really resigning himself to closing Orange Bank. Until then, we will have to find an ally.