One third of French bank accounts now live inside a smartphone. The promise was simple: zero fees, instant transfers, and sleek apps that make traditional banks look like dinosaurs. But behind the glossy interfaces, French regulators have uncovered a darker reality, one where weak controls enable money laundering, where customer service evaporates when you need it most, and where your unused balance becomes a target for new fees.
The Regulatory Hammer Comes Down
France’s banking watchdog isn’t impressed with fintech’s “move fast and break things” mantra. The Autorité de contrôle prudentiel et de résolution (ACPR), the French banking regulator, has issued a series of crippling fines that expose systemic failures across the neobank sector.
N26 received a €9.2 million penalty for anti-money laundering violations. Revolut got hit with €3.5 million for surveillance deficiencies. Monzo faced the largest sanction: €24 million for opening accounts under fake identities. These aren’t minor compliance hiccups, they represent fundamental breakdowns in customer verification and transaction monitoring.
Tracfin, France’s financial intelligence unit under the Ministry of Economy and Finance, has repeatedly warned these institutions about gaps in their controls. The pattern is clear: rapid growth prioritized over robust security. Europol’s 2023 report highlighted how fraudsters exploit these weaknesses, opening accounts with stolen identities and recruiting “financial mules” through social media ads targeting vulnerable individuals.
When Your Account Becomes a Liability
The regulatory issues translate directly into customer harm. Ordinary users report accounts frozen without warning, leaving them stranded without access to their money. Identity theft victims discover accounts opened in their names, sometimes accompanied by consumer loans they never requested.
The documentary investigation by Arte’s “Sources” magazine reveals how these failures cascade into real-world damage. With minimal human oversight, algorithms flag legitimate transactions as suspicious, while actual fraud slips through. When customers try to resolve these issues, they hit a wall of automated responses that can feel “à la limite de l’insulte” (bordering on insulting), as one industry observer noted.
The Customer Service Offshoring Problem
Treezor, a neobank provider, reportedly moved its customer service operations to Eastern Europe and laid off 80 employees in the process. This isn’t just a cost-cutting measure, it fundamentally changes the support experience for French customers dealing with complex regulatory issues.
Language barriers, lack of familiarity with French banking law, and rigid scripts create frustration when users need urgent help. One case highlighted a customer trying to recover frozen wages, receiving only automated messages that failed to address their situation. The human element, crucial for financial services, disappears when your “bank” is actually a tech platform optimized for scale, not service.
Sumeria’s Inactivity Fee Trap
Adding insult to injury, Sumeria (formerly Lydia) announced it will charge €3 per month for inactive accounts starting March 12, 2026. The fee applies to Basic plan users who haven’t made any transactions, payments, withdrawals, transfers, or investments, in the previous two calendar months.
The company frames this as replacing card inactivity fees with account inactivity fees, but the timing feels opportunistic. Users receive an email warning, but the onus is on them to act. Your options: make a transaction, upgrade to a paid plan, accept the fee, or close the account. Silence equals acceptance.
For expats and international residents who opened Lydia accounts years ago and forgot about them, this could mean unexpected charges on dormant balances. The fee particularly hurts those who keep small emergency funds across multiple platforms.
The French Online Bank Alternative
Faced with these risks, many financially savvy residents are returning to French online banks backed by traditional institutions. Boursobank (BNP Paribas), Fortuneo (Crédit Mutuel Arkéa), and Hello Bank (BNP Paribas) offer the same digital convenience but with full French regulatory protection and human customer service based in France.
These banks provide the essential guarantees that neobanks often lack: deposit insurance through the Fonds de Garantie des Dépôts (Deposit Guarantee Fund), robust fraud protection, and accountability to French regulators. While their apps might feel less “disruptive”, they don’t treat your salary as a beta test.
Practical Steps to Protect Yourself
If you’re using neobanks in France, consider these risk-mitigation strategies:
For daily use: Limit your balance to one or two months of expenses. Never park savings or investment capital in these accounts. Use them for convenience, not as your primary financial home.
For inactive accounts: Audit all fintech apps you’ve downloaded. Close unused accounts before Sumeria’s March 12 deadline triggers fees. Download your transaction history first for tax records.
For salary deposits: Domicile your main income at a French-regulated bank. If you must use a neobank, inform their customer service in advance about expected deposit amounts to reduce freezing risk, but this is a workaround, not a solution.
For documentation: Keep physical and digital copies of all communications. French bureaucracy values paper trails, and neobanks’ digital-only approach can leave you without proof when disputes arise.
The Bigger Picture
The neobank scandal in France reveals a fundamental tension between fintech innovation and financial stability. While these platforms democratized basic banking services, they also created new vulnerabilities that criminals exploit and regulators struggle to police.
For international residents, the allure of English-language apps and easy onboarding masks critical gaps in consumer protection. French financial law operates on principles of strict liability and customer protection that many fintech startups, optimized for growth in less regulated markets, failed to internalize.
The Arte investigation concludes that some neobanks skip necessary controls due to excessive productivity targets, pushing employees to rush verifications or eliminating human review entirely. Others simply lack the institutional knowledge to implement French compliance requirements properly.
Bottom Line
The fintech revolution in France has entered its maturity phase, and the growing pains hurt customers most. Regulatory fines signal that authorities won’t tolerate lax controls, but the real damage happens at the individual level: frozen accounts, identity theft, and now, fees for the crime of not spending enough.
Your banking choice in France should reflect your risk tolerance. If you value innovation over security and keep minimal balances, neobanks remain convenient tools. But for anyone building a life here, receiving salaries, paying taxes, saving for the future, the safest path runs through France’s regulated online banks.
The glossy app might feel modern, but when problems arise, you’ll want French law, French customer service, and the full weight of the ACPR behind you. In banking, boring is often better.
Action items:
1. Check all your neobank accounts for activity requirements
2. Close unused accounts before March 12, 2026
3. Transfer salary deposits to French-regulated banks
4. Keep neobank balances under two months of expenses
5. Document everything, screenshots, emails, transaction records
The digital banking revolution promised to put customers first. In France, regulators are forcing that promise to become reality, one painful lesson at a time.
