Orange postpones banking launch, discovers challenges of vertical expansion

Orange is discovering some of the challenges of moving into new vertical markets. It was all set to go live this week with its new Orange Bank in France, following various pilots and a launch in Poland. However, it will now delay the French debut until after the summer, because tests carried out with employees since May did not meet “the standards and criteria of excellence in terms of quality and reliability”.

The bank, based around Orange’s acquisition of Groupama Banque last year, has been positioned by the operator’s leadership as the centrepiece of its strategy to drive growth outside traditional mobile broadband markets. But devising quality services for new markets is tough – especially those, like finance, which are already mature and full of powerful players.

A Reuters report said Orange investors are cautious about the potential of the new service as the French banking sector is dominated by major firms like BNP Paribas and Societe Generale. To chip away at their position, even in the newer mobile banking segment, will require a high level of quality and differentiation, yet Reuters quoted CFE-CGC trade union official Sebastien Crozier being critical of early feedback about the Orange trials. He said the response had signalled “many incidents related to the quality of the user interface and the customer service”.

So Orange CEO, Stephane Richard, has decided to extend the test phase and postpone the commercial launch. “We aim to launch a high quality, innovative product for our customers and we will take the time necessary to ensure that these expectations are met,” the telco said in a statement.

Last month, Orange delegate CEO in charge of finance and strategy, Ramon Fernandez,
said the company hope to hit 2m mobile banking customers in 6-7 years.

In another setback for its growth plans in verticals, Orange has backed away from making an offer for German metering company Ista International. The French firm held discussions with Ista’s majority owner CVC Capital to buy the company, which could fetch as much as €5bn including debt, Bloomberg reported.