Should Telcos Become Banks?

Orange has leaped into banking – should other telcos follow? Industry leaders respond in a Light Reading survey.Should telcos become banks? That's one of the questions we asked the telecom industry in an industry survey conducted in late November ahead of Light Reading's annual 2020 Vision Executive Summit, where the results of the survey were first unveiled. A resounding majority -- 88% -- of the 189 respondents to the survey believe telcos should not go down this particular diversification route, even though service providers are desperately seeking new revenue streams as voice revenues dry up, data revenues stagnate and capital/operating cost pressures increase. The question is very particular: This is not about whether telcos should offer mobile finance services -- this is about whether they should become fully fledged, accredited banks. It's likely that among the 12% that voted in favor of telcos becoming banks were employees of Orange, the French service provider giant that has taken the leap into the banking world. In 2016 it acquired a majority stake in Groupama Banque before launching Orange Bank services in France in late 2017. In late 2018, Orange unveiled plans to offer banking services in seven European countries by 2023, setting itself a target of attracting 4 million banking customers within six years. Then only weeks ago, as part of its Engage2025 plan, Orange announced the following: Orange, for one, believes that becoming a bank makes strategic sense as the lines blur between the communications sector and other verticals and as pressure grows to derive revenues from non-traditional services. Further results and insights from our year-end survey will be published on Light Reading in the coming days. — Ray Le Maistre, Editor-in-Chief, Light Reading