These days, consent was obtained for the plan from 2019 for Mts Bank, which Telekom Serbia bought in 2014 from Dunav Osiguranje, as Dunav Bank, to be taken over by Postanska Stedionica Bank. This abandons the proclaimed idea of Telekom parrying Telenor’s entry into the financial market by buying KBC Bank a year earlier, as well as the expectation that thanks to the use of a million customer base, mobile telephony customers will be able to enter the banking market and include banking and, above all, payment services.
The experiment ended ingloriously with, when everything is added and subtracted, a loss. The accumulated loss of Mts Bank amounts to around 850,000 euros, and the years that this bank ended in profit are rare. However, the question remains whether the intention of the state was really for Telecom to create a mobile, online, digital bank or just to remove the burden from the stumble state of Dunav Osiguranje and transfer it to a much more powerful state company.
This is also indicated by the fact that Telekom transferred very few jobs to its bank, but most telephone bills are paid through other banks. After all, Mts Bank’s assets at the end of 2020 amounted to only 122.4 million euros or 0.3 percent of the banking market.
Although the explanation for the failure could easily be found in juggling losses between state-owned companies, the trip of another telecommunications company to banking could not be called successful either.
At the end of 2013, Telenor bought the stumbled Belgian KBC bank, primarily its license, considering that a good part of the clients were taken over by Societe Generale Bank. The idea was that Telenor, by introducing mobile financial services to the citizens of Serbia, would create a bank for individuals who would primarily perform payment transactions through this bank and their mobile phones.
However, seven years later, the accumulated loss of the bank, now called Mobi Bank, amounts to 5.3 million euros, and the bank has not been profitable in any year since the takeover. In 2018, after the Czech PPF Group took over Telenor’s business in Central and Southeast Europe, and among them in Serbia, Telenor tried to sell the bank to the investment fund River Styx Capital, which was not approved by the National Bank.
After that, the bank was bought by the PPF fund, as expected, so that the mobile operator and the bank are still under the same roof. In terms of size, Mobi Bank, although almost twice as big as Mts with 205 million euros, is still a minor player in the Serbian banking market.
At approximately the same time, in 2014, telecommunications operators and banks were united in Poland. Three of the four operators in the country took part in it, including T-mobile, the Deutsche Telekom branch and the British Orange Telecom.
After a few years it can be said that expectations have not been met. Namely, the growth of clients was half lower than planned, and the joint companies of telecoms and banks did not exceed more than five percent of the business of those banks. However, of all segments of the banking sector, the customer base in these telecom banks is still growing the fastest.
By merging, telecommunications companies can offer financial services to their customers, which contributes to profit. On the other hand, it has been found that when customers are tied to more products they are less likely to change operators.
In addition, this symbiosis adds value to what is especially valued today – customer data and their consumer habits. That is why Orange bought the bank in France in 2016, and by last year it had gained 500,000 clients in France and Spain.
Zoran Grubisic, a professor at the Belgrade Banking Academy, points out that these attempts by telecommunications companies to enter the banking market have so far been experiments and mostly unsuccessful.
“Telecoms make good profits, although not as they used to, but it is still satisfactory. Since they have a surplus of money, they look where to invest, and among other things, in the bank. These are not big investments for them, so why not try them. The idea behind it is to offer mobile telephony services to its clients, but it is not a natural connection, such as between banks and insurance. They cannot compete with traditional banks that offer complete services, from account management, payment transactions, cash loans, housing loans, etc.
“They are based on payments and cash loans and generate some income, but obviously they are not enough to cover the costs of running the bank,” Grubisic explains, Danas reports.
