Regional focus French connections
Founded a mere 17 years ago, La Banque Postale is a relatively young bank by Gallic standards. Yet as Levy-Barouch emphasises, it’s grown over the last intervening decade and a half into a major European bancassurance group, boasting assets just south of €800bn. “La Banque Postale’s business model relies on a multi-channel approach,” Levy-Barouch explains. With a significant network presence in the French territories, and also with a comprehensive digital banking product range both at La Banque Postale and through Ma French Bank, a fully digital bank created three years ago. Despite its relative newness, Ma has already attracted 600,000 customers since. Part of this popularity is surely down to the bank’s structure. La Banque Postale offers an alternative to both traditional banks and digital banks – most of which belong to established players in France – insofar as it is clearly recognised by international organisations to be at the forefront of responsible banking. BNP Paribas, for its part, has faced down the threat of digital banks in a similar way. Apart from upgrading its mobile application, in 2013 the group launched ‘Hello bank!’. Boasting the slogan ‘Mobile, just like you’, it offers a simple, smart, human and safe service. “It’s had quite a lot of success as a mobile-focused online bank, and it continues,” Heller explains. With three million clients across Europe, and 800,000 in the Hexagon itself, Hello bank! offers everything to cover basic needs of self- driven customers. “It’s a complete bank with a simple offer, and it’s less focused on accompaniment or advice because it is meant for people that are more self-driven,” Heller continues. “And it’s very competitive in terms of pricing.” Another answer to digital banks is investment in fintech – BNP, for instance, recently bought Nickel, a very successful neobank across international markets. France’s relationship with fintech began about eight years ago, Heller explains, and the country has matured at speed. In practice, this collaboration takes a number of forms. One example are commercial agreements, such as managing subscriptions and incorporating fintech into mobile apps. Buying and investing in external companies can help too. As Heller puts it: “This is a top priority to become the main bank for those innovative companies.”
The digital transformation of banking and financial services brought with it a number of regulatory changes as well, which together offer legal certainty and a strong supervisory framework. As a member of the EU, France’s rules are similar to those of its neighbours, even as regulations leave room for interpretation. The introduction of the Loi PACTE in 2019 is one such example. In response to the new challenges facing the global economy, the legislation aims to remove obstacles to the growth and transformation of companies in France.
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“I think that the starting point was to help and favour whatever could be useful for the creation of companies, especially in the mid-size because they are the ones that provide a lot of employment in the country,” says Heller of the Loi PACTE. Compared with Germany, which has a higher number of medium-size companies, the financial landscape west of the Rhine has traditionally been dominated by a few major players, BNP Paribas among them. The introduction of Loi PACTE is, therefore, aimed at developing many more small firms, ideally with simplified processes. In a similar vein, the law also aimed to make products easier to convert into cash. One example Heller gives is life insurance, a key product specific to France that, similar to a saving plan with tax benefits in the British context, was traditionally hard to transfer to another provider. Now, however, the new law allows customers to transfer insurance plans while keeping the benefits. The Loi PACTE has also simplified the retirement products offered by companies into one unique product, making everything more efficient. At the same time, the law also introduced a number of measures for companies to formulate and express what Heller calls a “purpose.” For instance, BNP is focusing on its ESG strategy, helping to bolster customer energy efficiency. In practice, that involves promoting its customers towards clean mobility such as electric cars.
A watershed moment
Both Heller and Levy-Barouch are confident about the future of the French banking industry, referring to the market as “mature” and “solid” respectively – even if that means traditional banks will have their work cut out to keep up with the continued rise of the fintechs. “I do not expect that competitive, regulatory and digital pressure will diminish in the foreseeable future for the French financial sector,” emphasises Levy-Barouch. “Moreover, all French banks have robust capital structures and underlying business models, and I do reckon that they will be able to sustain the headwinds created by the recent pandemic as well as by the impacts of the war in Ukraine.” Yet as Heller points out, one issue that poses a challenge for the global market, not just France, is cyber security, which requires continuous investment and regulation. Another challenge is ESG. “[It is] a major game changer because it involves all changes in your products, in your processes, and also the reporting,” she says. “You need to have a lot of data to follow the carbon impact of your portfolio. So, it’s a huge challenge, but also an opportunity.” All the same, French banks seem well positioned to withstand the storm around them – thanks in large part to the sector’s diversified and consolidated banking sector. Boasting some of the most reputable and established banks in the world, it’s clear why the French banking system ranks fourth worldwide – and only continues to grow. ●
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Sophie Heller, COO, personal banking and services, BNP Paribas Commercial.
Oliver Levy-Barouch, deputy CEO,
La Banque Postale.
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