How to start a bank and get a banking license
Starting a bank is a complex and time-consuming task. It often involves multiple specialists and agents dealing with various authorities that work together to achieve a particular goal.
Do you dream of a profitable business? About opening of company that will not only bring profits but also give satisfaction? Imagine opening your very own bank or financial institution with a banking license. Running this kind of franchise is easier than you think. At the start, as well as at all stages of your business, you can count on the franchisor’s support and even a refund of expenses incurred to open the facility.
Banking on your own?
Opening a partner branch has an important advantage – you get to use a proven method for a successful business. You also receive a trade name and logo. Another advantage is financial assistance, e.g. for employee promotion or training. Partner branches operate as the bank’s own branches and offer popular financial products, e.g. personal accounts, cash and mortgage loans, deposits or credit cards, including products for self-employed people.
A brief guide:
The list below depict the base requirements of running a bank business:
- A business plan
- Key individuals (including a board of directors and management team)
- IT Systems (Compliance, Reporting, Back-end, and Front-end)
- Your correspondent and banking relations
- Banking license
Got a few million euros?
As a partner, you may contribute a part of initial capital in the form of equipment and real estate, if they are directly useful in conducting banking activities.
A banking license is a privilege that’s granted by governmental bodies to financial institutions that meet designated criteria, which allows them to operate in the banking sector. A banking license usually means that you have the right to:
- accept deposits
- a membership in the clearing system
- protection in the form of deposit insurance
- the option of appealing to the lender of last resort
- granting loans
It’s not easy to get a banking license and the requirements are based on specific laws and regulations, as well as applicable regulatory framework where the bank will be located, so differences in requested documents are strictly up to the particular country law.
Foreign banking license
Starting an offshore bank or applying for an offshore banking license is almost always the easier option. When you start a bank, your financial company will have an almost limitless array of possibilities to take advantage of in jurisdictions where tax regulation is less strict. For instance “Revolut” received a European banking license. The European banking license allows for the above mentioned company the ability to accept deposits that will be protected up to 100,000 EUR under the European Deposit Guarantee Scheme.
As you can see, creating a bank is not easy, even if we win in the lottery. To start such an activity, one should go through numerous procedures, hoping that the appropriate, often vague, requirements will be met. In addition, remember you must have a banking plan (up to three years) to get any permits from financial supervisors.