Yahoo Finance SocGen expects French online banking consolidation
PARIS (Reuters) - Societe Generale expects to see consolidation among internet-based banks with the revenue pool falling, as competition drives tariffs for services down, its chief executive officer Frederic Oudea said on Thursday.
Societe Generale (SocGen), like peers such as BNP Paribas, have boosted their online business to counter low-cost internet competitors, and a drop in the numbers of clients coming into their branches, both of which are hurting profits and forcing them to close outlets.
"I believe, in the long run, scale will be important. We will not have a multitude of profitable online banks," Oudea said at a fintech conference in Paris.
The biggest operators in the online banking market in France are ING direct, SocGen's Boursorama and Credit Mutuel's Fortuneo.
"Boursorama is the cheapest bank in France...at least for the services it provides," Oudea said.
SocGen's Boursorama, which offers online broking, banking and other financial services, aims to double the number of new clients, coming from outside its existing networks, to 2 million by 2020. Over the longer term, Oudea said he saw the number growing to 8 million.
Rival ING Direct had 1 million clients as of July last year. Boursorama last reported 918,000 clients at the end of September.
NEW ENTRANT
A new entrant is knocking at the door of the online banking market. French telecoms operator Orange and Groupama Bank are launching Orange bank in a few weeks, promising a "break" from what rivals offer.
"We will try to do this under such conditions that both in terms of price and transparency would make it really a game-changer to what exists now in the French banking sector," Orange CEO Stephane Richard said at the Paris fintech forum.
Some French banking executives have expressed concern about the entry of Orange Bank into the market and the impact on profit margins. They point to the telecoms market and the arrival of low-cost operator Free Mobile (ILD.PA) which fixed much lower tariffs than its rivals.
Boursorama's Oudea said he was not worried and said he expected banking services to become cheaper over time on the back of improvements in efficiency.
Orange bank is betting on the vast telecoms network of its parent that gives it access to 29 million clients. It is aiming to win 2 million of those clients.
(Reporting by Maya Nikolaeva and Julien Ponthus; Editing by Elaine Hardcastle)
