by Jamie Holmes
Orange, a French telecommunications company, will enter the financial industry after acquiring a 65% stake in Groupama Banque. A launch for ‘Orange Bank’ is slated for 2017 in France and will eventually expand across Europe. Orange’s CEO Stephan Richard stated on January 5 that “a unique combination of essential assets” will help it to launch “a genuine bank 4.0”. This acquisition means that the company has already built a strong profile in the financial sector with access to Groupama’s 550,000 customers. The company aims to earn €400,000 in revenue from financial services by 2018 and are looking at operating an entirely mobile bank. Are they using the Blockchain and Bitcoin to build this new, mobile bank?
Participating in a cross-industry effort, Orange contributed to backing for Blockchain startup Chain.com. Pierre Louette, responsible for Orange Digital Ventures, stated that “we believe in the disruptive potential of the Blockchain… becoming a key partner of Chain will help us to learn faster and launch trials around this technology. We are seeking to carve out multiple use cases in our range of businesses to improve our services and propose new ones…” This means we should expect Bitcoin or applications of the blockchain as the foundations of Orange’s future mobile bank and possibly other, new services.
Orange has been active in the Bitcoin space for quite some time now; back in April the company started to consider serious investments in Bitcoin start-ups. Orange Silicon Valley (OSV) is the Californian subsidiary of Orange; its CEO, Georges Nahon, stated in January that companies will flock to the technology in search of the “Blockchain killer app.” OSV has invested in many Bitcoin start-ups, including Bitwage, a provider of wages and freelancer payments solutions, where $760,000 in seed funding was raised.
Last summer, Sebastien Canard from Orange Labs R&D highlighted that the blockchain offers a solution to the complex problem of how to initiate trust without a central authority. He also noted some drawbacks of this technology, namely the possibility of a so-called 51% attack. Speaking to the audience at the CNAM conference, he said that, “I will work on trying to improve the Blockchain… and we’ll see in some years if Orange will be a leading part in Blockchain [technology] or not…”
Most telecom companies are looking to expand their mobile payments services. Orange already has over 12 million customers using its Orange Money transfer service in Africa and the Middle East. In at least 9 countries in Africa, mobile banks outnumber traditional bank accounts. Microsoft’s CEO Bill Gates reckons almost everyone will be ‘mobile banking’ by 2030.
Consumers are increasingly demanding payment options using their digital devices, and with Apple and Samsung launching payment services, Orange wants a piece of the market too. Although we know that Orange plans to offer mobile banking services, they have not yet stated how they plan to differentiate themselves from more established players in the banking sector.
By cutting costs using Bitcoin and offering new products using the Blockchain, Orange looks to be positioning itself as a different type of bank:. An entirely digital bank built on a trustless underlying technology. Co-operation with Bitwage and other start-ups means Orange’s customers may soon be able to receive their wages, pay bills, save, and agree on mortgage and insurance contracts all on their mobiles, eliminating the need for physical outlets.