Consumption. Online Banking: The End of the Golden Age?

Are we witnessing the decline of the online banking system, which was previously booming? This is the question we are entitled to ask ourselves when one of the major banks in the sector in France, namely La Banque Postale, announces the end of “Ma French Bank,” its bank accessible via mobile application and internet , by next summer.

Initially, as the internet rapidly expanded, pioneers like ING, Fortuneo, and Boursorama emerged in the early 2000s, shaking up traditional banking practices. They specialized more in secondary savings products. Then, in the early 2010s, new players arrived, then called neobanks, often offering only limited services, such as a current account and a bank card or an online savings pot. All via a 100% mobile interface.

The trade war is rapidly raging. New players are multiplying tempting offers to attract new consumers: from a few dozen to several hundred euros offered upon opening an account, free bank fees , etc. These practices encourage the emergence of so-called "ghost" accounts, accounts opened solely to take advantage of these benefits but which remain unused thereafter. These are dead losses for banks which, in addition to having given a benefit, or even money, to their customers, must maintain accounts that earn them nothing.

A study published in May 2022 by the Simon Kucher firm counted 400 neobanks worldwide, and only 5% are profitable. This profitability can only be achieved with sufficient critical mass, i.e., a large number of customers. In France, leaders like BoursoBank, Hello Bank, Fortuneo, and Monabanq have attracted enough consumers and seem to have found their cruising speed.

But how can we trust smaller players that aren't financially sound? The Banque de France, through its Prudential Supervision and Resolution Authority (ACPR), states that "the applicable regulations (for online banks) are the same as for traditional banks in terms of consumer protection." In France, the bank guarantee for deposits covers customers up to €100,000, and that for financial securities (shares, bonds, mutual funds, etc.) up to €70,000 per banking institution. It is therefore recommended not to exceed these amounts, and to increase the number of institutions if necessary.

However, the ACPR specifies that "funds held by payment institutions and electronic money institutions are not protected by the same deposit guarantee scheme as credit institutions." In other words, neobanks that only issue bank cards or online money pool systems, for example, cannot guarantee their customers' funds with the state guarantee. These institutions must take out dedicated insurance or open a segregated account to secure their customers' funds.

The ACPR is also not competent to control players without a physical presence in France. These players are subject to control by their home state. But the ACPR is reassuring: "The "AML package" adopted by the European legislator in the summer of 2024 will allow the direct control of around forty entities by a new European authority, the AMLA ( Anti-Money Laundering Authority ), by 2028; the other players will continue to be controlled by national authorities, including the ACPR, however within an even more harmonized framework than currently, particularly in terms of supervisory tools and practices."

On the trust consumers can place in these neobanks, Jean-Michel Rocchi, a teacher and author of numerous books on the subject, is fatalistic: "No matter the bank, if all customers demand the repayment of their deposits at the same time, the bank collapses. The entire banking system is based on trust. We have no choice."