HOW TO START A BANK

Financial Licensing Advisors (FLA) is the global leader in bank licensing services. We are specialists in bank startups and licensing for new banks.

If you need to start a bank, you will follow specific due diligence procedures and various steps required by law depending on the jurisdiction in which you are applying. Financial Licensing Advisors will provide you with an integral pre-built solution tailored to your specific needs. Staring a bank is a very complex undertaking. We are experts at fast and effortless bank licensing deployment. Our services and solutions will have you operational in no time.

Financial Licensing Advisors routinely sets up and deploys new banks in most major banking jurisdictions. Authorities and financial institutions recognize Financial Licensing Advisors as the financial licensing leader in the international banking industry. We do not structure bank-type vehicles but, rather, fully licensed and supervised banks.

Before moving on with this useful “how-to” guide, please review the following options for this topic.

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Welcome to this “How-To Guide on Starting a Bank.” The information that this guide provides is the result of years of experience deploying new banks in most major banking jurisdictions. If you have any questions or comments, please contact us using the form below.

“Starting a bank is a major undertaking but you will be covered by the international licensing experts at Financial Licensing Advisors. Starting a bank is as ambitious as it gets but in the end it is absolutely worth it.”

Most clients that approach us about establishing a new bank or that require a licensing service for a new bank have already evaluated the costs and have decided to undergo the lengthy and complex process for licensing solutions. A decision regarding setting up a bank and how this applies to your current business plan is often made after weighing the benefits of becoming a bank. Usually, the ability to join the financial banking system directly is much more favorable, even for smaller financial institutions that will greatly benefit by growing into a bank.

Often, we are approached by clients that either have outgrown their licensing boundaries or are experiencing operational inefficiencies or restrictions with their current financial license. In such cases, starting a bank or applying for a banking license is almost always the right choice. When you start a new bank, an almost limitless array of possibilities opens up for your financial company.Lea Denning

Financial companies in different situations (including FX, wealth managers, family offices, IB, M&As, FAs, IAs, payment processors, bit or crypto companies, and fund managers) will at some point in their lifecycles find it necessary or desirable to grow beyond their current licensing limitations. Thus, it is natural to explore other options for a bank license. Having a bank will potentiate your business beyond any initial planning, as options will unfold automatically. Our interest is always in delivering long-term solutions for banks. Therefore, you can be sure that we will be right by your side during the pursuit of your operational objectives after you are licensed.

Financial companies seeking to start a bank have, essentially, two options for obtaining a bank license: 1. License a new bank in a completely independent, segregated manner (in other words, establish a new entity that obtains a bank license and undergoes the process independently), or 2. Seek licensing of your current financial institution. Both options must be carefully considered.

To decide what is best for your organization, you will need to weigh and understand the applicability of all the specific requirements to start your own bank from the ground up, as well as any relevant requirements regarding applying for a banking license. The differences between setting up a new bank and licensing a financial company that is already in operation are substantial. Thus, you will need to properly review the information in this how-to guide.

What can be done to speed up the setup of my bank?

Following, we will cover the specific requirements for starting your bank. However, you must understand that obtaining a bank license is a complex undertaking.

Given such complexities, we have developed various solutions to reduce licensing times. We can speed up a bank deployment like no other financial licensing specialist can because we have developed a standardized procedure that complies with applicable regulations in most jurisdictions. In addition, we have formed countless banks all over the world. The products we offer are already compliant with all the requirements for the issuance of a new license in major jurisdictions (for a Type A or Type B licensed bank). Depending on the licensing jurisdiction in which you are operating, there is a good chance we already have simplification strategies for licensing your financial company locally. Therefore, obtaining a bank license will be easy and straightforward from day one.

We want our clients to be able to start doing business as soon as possible and our focus is on having them as clients for the long term. The solutions we provide include everything required for licensing a new bank. Among our various solutions are several turnkey components that are compatible with most financial business models and that are specifically applicable to your own business plan. We will also have provisions to cover any relevant staff management team needs as well as business plan design, operation, supervision, the establishment of physical locations, intermediary account setup and management, reporting, auditing, core banking services, and myriad outsourcing solutions for your new bank.

Starting a bank in general is a very complex process but Financial Licensing Advisors has developed a simple and standardized procedure that will make the process a breeze. Everything is covered, including licensing, setup, deployment, and initial operation solutions to fulfill all requirements in the jurisdictions of your choice.

We will structure and execute all the work, including the organization of legal document preparation, the recording and filing of all relevant requirements, and the holding of multiple meetings with the relevant regulator and actors.

The process of starting a bank will begin with the evaluation of requirements in the specific jurisdiction chosen and the submission of the application for a new banking license. The way in which the application is filled out and presented is key to approval. The evaluation procedure will often take three to 18 months depending on the jurisdiction. This lead time also greatly depends on the current situation of your financial company or your business plan. Financial Licensing Advisors will handle all the relevant startup and registration procedures, speeding up this process.

Prospective licensees must understand the specific limitations on the market regarding licensing a bank-type structure. Throughout our years as a bank licensing advisor, we’ve found a lot of misleading information related to banking licenses and creative alternatives that the market provides both online and in consultation. Prospective bankers willing to start a bank must be aware that the international banking community is not open to new players and that there are no shortcuts when licensing or starting a bank. The process requires strict compliance with applicable regulation, and is expensive and time-consuming. By seeking a fully licensed bank, we provide a solution that is specific to our clients’ needs. We aim only to provide clients with a long-term solution and our interest is in establishing a long-term relationship with them. We are not only getting you licensed but getting you or your company completely deployed into full operation. We will cover you every step of the way.

How to start a bank

The first step to starting a bank is to evaluate the applicable laws that will regulate the bank. This includes reviewing applicable regulations for the specific activities you will conduct. This must be done in an international context, as you will likely be delivering international banking services.

The second step is careful planning of the application procedure. This will require an evaluation of your current status and how this should be presented to the authorities in order to correctly depict your capabilities as an organization.

The third step is to carefully review your current status in terms of licensing within that specific jurisdiction. Before moving forward, you want to ensure that the licensing scenario in that specific jurisdiction is open to new players. You must understand that licensing not only is a compliance/legal regulatory process but will depend on the current political scenario. Regulators often see a new player as a risk, and this fact must be considered before moving forward with a licensing process that could end up being denied or reviewed for years to come.

The fourth step is getting your capital ready. Starting a bank requires adequate capital as prescribed in applicable regulations. Jurisdictions vary on the amount required for each specific license type. Prospective bankers should understand that without capitalization, applying for a bank license has no useful objective. Thus, you must review this step before moving forward.

When evaluating the applicable regulatory rules, you should perform a complete diagnostic of your specific situation, then furnish all the specific requirements to start the bank, considering the fact that the furnished data should be integrated into the master business plan. We can help you with such development, and can do it hand in hand with you prior to filing. Several additional services that are part of the bank-in-a-box solution can also be included in the process. These are relevant licensing services that we routinely provide to international clients.

After obtaining all the required information, we reach out to relevant regulatory authorities to review specifics before formally submitting the request. This is usually done through various meetings with the regulator, which often provides feedback on what they want to see and what should be addressed in the business plan and the application.

We are the most-recognized specialist performing financial licensing services for clients worldwide on a recurring basis. We understand specifics that perhaps other specialists are not aware of. We will provide solutions to any problems and will diagnose your current situation by working with you to achieve your specific goals.

Starting a bank often requires understanding and screening the political scenario in the prospective jurisdiction, as well as reviewing any relevant financial services in the prospective banking sector. Consider that in some cases, specific geopolitical events will interfere with, limit, or restrict the issuance of new licenses. The current regulatory status and the regulator’s desire to issue a new license are key elements that must be reviewed before moving forward with an application. We recommend that you read our “Starting a Bank Business Guide” for more information.

How to start a bank

To start a bank, you will be required to have at least the following:

A minimum of two partners and a solid management team with an impeccable track record and without a history of bankruptcy, money laundering, fraud, or related issues.
Senior directive staff with extensive banking experience and general experience in the financial sector. Over 10 years of experience is required (20+ desired)*.
Appointment of a compliance officer and a risk management officer, among other key individuals.
Setup of a local office in the jurisdictions where you are applying.
Directive staff with relevant experience (typically have an MBA or similar qualification from an international renowned institution).
All Directors and shareholders will be required by law to submit to a full background check and audit conducted by an external auditing firm.
An initial business plan submitted with the application.
Initial paid-up capital requirement 1
Extensive experience among all first- and second-level managers and directors.
Reporting backend banking software implementation.

^{1. Depending on the jurisdiction, bankers and shareholders will be required to be liquid at the time of the application. Paid-up capital requirements vary greatly depending on the applicable regulations. (As of this year, requirements were from €950,000 to €28.5M in the Caribbean region.) All beneficial owners will be audited and screened by the financial regulator before the regulator approves the submission.}

Aside from the initial costs for the setup and for our services, you will need to comply with the requirements above. In some jurisdictions, these requirements vary greatly depending on the type of license being pursued. Sometimes, specialized staff must be compliant with specific regulatory provisions in the jurisdiction where you are applying. In such cases, Financial Licensing Advisors can assist you with qualified staff or directors locally or internationally who will satisfy those specific requirements. All human resources whom Financial Licensing Advisors provides are prescreened for each specific task and have been performing these tasks. Each jurisdiction will have different requirements in terms of authorizing the initial application for the license.

If necessary, Financial Licensing Advisors will provide you with a complete turnkey solution. When you are in need, we will be able to outsource specific requirements established by the authorities.

Can you provide assistance with some of the requirements to start a bank?

Often, clients ask what Financial Licensing Advisors can provide in terms of the required items to start a bank. Aside from capital, we can provide you with almost everything required based on the specific regulatory provisions for licensing in most jurisdictions.

Typically, clients already have a complete structure in place—one that is specific to their business model. Often, this structure complies with applicable regulations or specific requests from the licensing authority. Financial Licensing Advisors should conduct an initial analysis of these requirements and of the current tasks that the client is performing. This will avoid unnecessary costs or duplicate roles/activities.

If you are still missing requirements, we can outsource and/or provide you with the missing components, such as HHRR, a business plan, reporting platforms, IT support, or any other complex task that is required or relevant to that specific jurisdiction. In some cases, clients might require specific solutions to comply with the requirements to start a bank under specific circumstances. In all cases, we can provide a solution.

Generally, we can:

Provide you with pre-screened senior directive staff with extensive banking experience and general experience in the financial sector. We want individuals with over 20 years of experience.
Assist you in appointing a compliance officer and a risk management officer, among other key individuals.
Assist you with the setup of a local office in the jurisdictions where you are applying.
Provide you with all directive staff. If you provide your own, please be aware that they should typically have an MBA or a similar qualification from an internationally renowned institution.
Review all information that directors and shareholders will submit for their full background check and audit by an external auditing firm.
Develop, along with you, an initial business plan to be submitted with the application.

Prospective bankers that are starting a bank should note that although Financial Licensing Advisors is able to provide out-of-the-box solutions and will help you every step of the way, we are unable to provide you with capitalization. By definition, opening a bank requires liquid capital. One of the main items that will be evaluated during the initial stages is the liquidity of the beneficial owners and how that liquidity falls into the business plan submitted for approval.

This is an extensive topic. To continue reading, please review the “Starting a Bank Business Guide” for specifics about starting a bank.

Because licensing is such a complex topic, you must talk to a specialist that will review your unique situation and provide specifics about your banking needs. Email info@bankinglicensing.com or contact uswith additional questions.

It’s a pleasure having you here,

Please contact us at: info@bankinglicensing.com
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Tel. +1888 8892865

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