While having too much money in the bank is certainly the wish of many people, it comes with its own challenges. One of the solutions applicable to your problem is to start a bank. It may seem like an overly complicated process to start a bank, but no barrier is strong enough when you are determined.
Furthermore, it has never been easier in UK history to start a bank because the regulations have been improved to make it easier for new banks to enter the market. Payment systems such as Visa have also been required to accept new banks into their platforms.
Before you launch your own bank, one that is authorized and consented to by the PRA and the FCA, there are some qualifications you must meet as per the regulators’ assessment.
What are the steps you must first take to start a bank?
- Research
How well and intensive your research is will directly influence the success or failure of your application. You will need to understand how banks are regulated, by whom and to what extent. As you gather information, you will also learn about the forms you will need to fill and the responses expected in the form.
The PRA and FCA have different elements that must be met for you to call yourself a bank. For the PRA these elements are;
- Where the office is situated
- Supervision
- Legal status
- Suitability
- How your business will be carried out
For the FCA these elements are;
- Supervision
- Business plan
- Resources
- Suitability
The research process should also include the policies you will have for your bank and the management team you will work with. When carefully and appropriately selected, they will lead to the definite success of your bank.
You can have a lot of money sitting in the bank and not have enough of it to start a bank. The research process will provide you with an approximation of just how much money you will need. In case you do not have as much money as is required, you will need to source for more funds.
- Prepare
Preparation includes hiring the right partners and management board. The more expertise your partners have, the more likely you are to follow all the expected regulations and meet the required qualifications. The right team attracts clients to your bank and more funds to add to the finances.
This step also includes clearly defining the services you will provide and the experience you wish to create for your clients.
Prepare a business plan and any accompanying documentation required in the application process. A proposal will be rejected if it is not completed exactly as stipulated in the forms. The assessment of your application carefully inspects some areas which can lead to the failure of your application if not adequately provided for. These areas include but are not limited to;
- Finances
- Ownership, governance, and management
- Customer service and journey
- Funding sources
- IT application
- Provisions for risk control
- Outsourcing
- Policies
- Procedures
Conveniently, there are services offered to help you apply for and start a new bank. The Bank of England, for instance, provides a pre-application service that goes through your proposal, improves and challenges it all in a bid to prepare you for the application process.
- Apply
A successful application process means that both the PRA and the FCA, the relevant regulatory bodies, consent to your application. Your application should have all the elements each regulator asks for.
Having filled the forms as asked, you will need to email PRA your application. You will also need to submit
- Two printed copies of all documents
- Electronic copies of the document on your preferred hardware such as DVD or memory stick
- A cheque made out to the FCA, Financial Conduct Authority. The application fee is£ 25,000
- Wait
When you apply, your application is logged, and officers are assigned to your case for assessment. Each regulator independently decides if your application is successful. You will be informed whether your application is successful or not. Should one consider your application to be unsuccessful, you are not qualified as a bank. The upside to a denial is that you have the chance to address the issues the regulator has with your application.
Starting a bank is not as complicated as you would imagine. But likewise, it’s also not as simple. How long the process takes is fully dependant on you and your finances, your level of preparation and the expertise of the team you choose to work with. Should the odds be in your favor, you will successfully start a bank that will compete with major and established banks.
Read more:
- How to Open a Bank (with Pictures) – wikiHow
- How to start your own bank | The Spectator
- How to set up a new bank
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