Thursday 26 April 2018

SocGen Takes Up Challenge From Orange With African Mobile Bank

SocGen Takes Up Challenge From Orange With African Mobile Bank
(Bloomberg 09/15/17)
SocGen Takes Up Challenge From Orange With African Mobile Bank

Societe Generale SA, challenged on its home turf by Orange SA’s push into banking, is fighting back with a new mobile lender in Africa.

The French lender started YUP, a new app for smartphones, in Senegal and Ivory Coast and plans to begin operating in four other sub-Saharan countries this year and next, the company said on Thursday. The bank aims to double its client base to 2 million in the region within three years.

“Telcos have opened the way and they’ve gotten ahead,” Alexandre Maymat, who oversees Societe Generale’s operations in French-speaking Africa, said at a press briefing. “We’re catching up” by redefining the retail strategy and providing a broader offering than telephone companies.

Chief Executive Officer Frederic Oudea wants to make African growth a key ingredient of his strategy. To do that, he’ll need to challenge the dominance of phone companies in low-cost cash services on a continent where most people don’t have a bank account. Revenue at Societe Generale’s 18-country African consumer-banking business has risen about 10 percent annually since 2014 and “we are in a double-digit trend” for growth, Maymat said.

Orange, France’s former phone monopoly, has become a leading online payment provider in parts of Africa over the last few years. It’s Orange Money operations have 32 million clients in more than 10 countries in Africa and the Middle East for payments and cash transfers. The company, which is seeking for growth in one of Europe’s most competitive wireless markets, in June postponed the launch of it’s French banking business, a full-fledged lender.

Fintech Innovation

YUP will use payment technology called near-sound data transfer that allows customers to bypass phone carriers. It was developed by TagPay, a fintech company in which Societe Generale purchased a stake last year. The new mobile bank is expected to break even within three years, Maymat said.

The African operation will enable retail clients to do cross-border transactions and lending, including small “nano-loans,” Maymat said. The offer will rely on a network of 8,000 third-party agents including shops and gas stations. Societe Generale hired Valerie-Noelle Kodjo Diop, a former BNP Paribas SA country head for South Africa, as chief of innovation for Africa.

Kenya’s Safaricom Ltd. pioneered phone-based cash transfers in 2007 with M-Pesa. Safaricom has agreements with KCB Group Ltd. and Commercial Bank of Africa Ltd. for its mobile-money platform, which has 27 million users. M-Pesa handled more than half of Kenya’s mobile-commerce transactions in the first quarter, according to data from the country’s Communications Authority. Read more at:

By Fabio Benedetti Valentini

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