Orange Spain intends to follow the lead of its French parent company and roll out a mobile banking service by the end of 2018, according to a news report. The Orange Bank platform has been available in France since 2 November 2017 and combines the attributes of a traditional bank with a mobile app for Android and Apple devices. The service allows customers to pay with a Visa bank card or by mobile payment (set up in partnership with Germany-based Wirecard Bank), to send money by SMS using Single Euro Payments Area (SEPA) transfer and to check their bank balances in real time.
Last year Orange announced that its new bank intends to eventually attract more than 2 million customers in France and that it was considering similar services in other European countries, including Spain and Belgium.
In France, new bank-account holders have been offered €80.00 (US $96.00) as a welcome bonus, with an additional €40.00 (US $48.00) bonus for customers who also subscribe to a mobile postpaid/fixed broadband plan sold by Orange or its brand Sosh. Orange Spain is expected to announce a similar promotion to attract clients to its own financial service. In November 2017 the operator partnered with Wirecard to create a payment service for 12–17-year-olds called Orange Cash Joven.
As a major multinational mobile operator, Orange certainly has the reach and the deep pockets to pursue this plan of entering the banking sector. However, one must wonder whether it will be worthwhile, given the nature of the markets being targeted and the incumbent competition.
Mobile banking, as we have observed on many occasions inTarifica’s Story of the Week, has made tremendous inroads in countries around the world. Initially and to a large extent still, its success has been based on giving the so-called “unbanked” access to banking, and even—in a remarkable extension of the “mobile-first” concept—on enabling barter-based rural societies in developing countries to bypass the cash stage and go straight to a mobile-money economy.
In developed countries, though, mobile banking as provided by mobile operators, while convenient, is less essential. Unlike in, say, sub-Saharan Africa, for most users there is no explicit need to make payments for non-mobile services via their phone bills. Lack of access to established banking is not a problem in countries such as France and Spain. While it is true that some consumers may like the convenience of doing their banking via their mobile operators, there is plenty of competition from traditional banks—many of which have already established app-based mobile services offering a wide variety of actions that can be performed from a smartphone with ease. In order to thrive in this sector, The Orange Bank will most likely have to provide something more than just convenience, something along the lines of better rates and banking functionalities—certainly something more than an €80.00 signing bonus.
It is worth noting that Orange Spain’s first foray into banking was via a youth-targeted product, Orange Cash Joven. In developed countries, the youth demographic is the most receptive to mobile banking via a mobile operator, first off because these users are far more likely than older ones not to have a bank account. In addition, youths are particularly connected to mobile technology and show strong brand allegiance, so they will be receptive to the idea of starting a new bank account via their MNO. But whether Orange can find enough users to justify a broad-based banking product is, of course, not yet clear.