It’s late March, the phone rings, a High Net Worth entrepreneur with the opening line:
“ I want to start a Bank, can you give me a CEO?”
This got our team thinking! April, and the FCA have confirmed 29 firms have applied for authorisation to become banks. The red tape is being loosened, last summer the regulator relaxed the rules for new entrants and the minimal capital requirements have been lowered to encourage start-ups. We understand it took Metro Bank nearly two years! However, recently we have seen private equity buy smaller regional banks to acquire a license.
So, what are the top five challenges of starting a Bank?
1. Strategy, the niche and value proposition, it is a competitive market, vanilla current accounts are tough to make money in and customers are worried about switching. Do you go evolution or revolution? Proposition development people and subject matter experts will be in demand.
2. Funding, capital requirements, how much money is required to meet regulatory capital adequacy? Anecdotally, I have the impression that there are quite a few investors out there looking to invest in retail financial services. Credit Risk management expertise will be key.
3. Systems, technology is expensive, it must work 100% of the time (we get very upset if we cannot access our money!). Digital and payment’s expertise, already in high demand, will be required.
4. Risk management, Fraud, AML and compliant systems are business critical. You must have the individuals with the expertise to build the systems and processes. (people, systems and process, make things work).
5. People. Demand for individuals that have the experience and expertise to satisfy the regulators and deliver business objectives. Here at Executives Online, we have a highly qualified network of Executives able to hit the ground running, from CEO/COO through to Regulatory experts. For over ten years, we have supported high street banks and challenger banks with specialist expertise and have a “black book” of high calibre individuals ready at short notice.
What happened next? We are bound by confidentiality!