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How to launch your own online bank in two weeks?

According to PWC, about 20% of businesses in the field of financial solutions are at risk because of the so-called fintech. This is due to the fact that young, ambitious, as well as technically savvy companies take advantage of the weaknesses of classical financial institutions and offer the service that people need.

At the same time, about 25% of all fintech projects encroach on the “sacred” - on money transfers. And as practice shows, they often offer conditions many times better than ordinary banks: instant transfers around the world, low commissions, profitable currency conversion.

Demand for the services of modern payment systems or neo-banks is growing, which leads to the rapid emergence of more and more new projects in this area. The coronavirus pandemic only increased the demand for remote services of all varieties, including financial ones.
In this article you will learn how you can open your own online bank and do it as quickly as possible.

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Is it realistic to launch an online bank in two weeks?


If you break down the process of creating your online bank into simple steps, the process will look something like this:

  • Registration of a company that will become a bank;
  • Obtaining a financial license;
  • Installation of hardware and software;
  • Customer acquisition.

The longest and most important process, of course, is obtaining a financial license. Unfortunately, it will not work in two weeks.

However, from experience we know that some customers already have one or another financial license. We will talk about the types of licenses in more detail later, but I’ll clarify right away: to open an online bank it is not necessary to get a purely banking license. It may well be a license to issue electronic money and other permissions.

And it is precisely such licenses obtained in Estonia, Lithuania, Malta that many entrepreneurs have. They can use the existing asset and launch an online bank in about two weeks - using ready-made software solutions and the infrastructure of special services.

And now let's go through the outline of all the stages of launching your online bank.

Registration of the company - the future bank


Before obtaining a license, it is necessary to create a legal entity that will receive this license. It is not possible to issue a bank or other financial permit to an individual.

Most often, it is recommended to register a company in the same jurisdiction where you plan to obtain a license - this will simplify the work. However, in some cases, you can open a company in one place, and get a license in another. This is often required when you start working in several markets and everywhere you need your own license.

Registration of the company takes from a couple of days to several weeks - it depends purely on the country of registration and the chosen form. Joint stock companies often require more training than limited liability companies or corporations.

To register the company itself, you will need the following documents:

  • A copy of the passport (certified and translated) by the owner of the company (owners);
  • Copy of the passport of the director / directors;
  • Proof of the address of the owners and directors - most often the utility bill is not older than 3 months.

Other documents may be required.

The cost of the company starts from 2-3 thousand euros, excluding the authorized capital. The size of the fund is determined by what license and where you get it.

Obtaining a financial license for your own online bank


When we talk about a modern online bank, we mean those financial institutions that can provide banking services: open accounts, provide money transfers, convert currencies, etc.

Due to changes in the laws of many countries, a full-fledged banking license is not always necessary to launch such a project. Often, a license to issue electronic money is suitable, a license of a payment provider - EMI, PI, and others.

Moreover, such a license can be obtained faster and with less requirements. However, we will consider several interesting options, both for obtaining a banking license and electronic money.

I’ll clarify right away in order to avoid misunderstandings: you can get a banking license in almost any country. In theory. In practice, in most developed countries, a banking license is very expensive, and the procedure for issuing it is dreary and lengthy. I offer ideas, at least a little, but to reduce bureaucratic delays and launch my own bank.

Vanuatu Banking License


Vanuatu is an offshore jurisdiction in the Caribbean. The financial and business center, including allows you to register companies and obtain a banking license.

A bank in Vanuatu can operate internationally. The authorized capital should be from $ 500,000. Obtaining a license will require at least one personal meeting with a representative of the Reserve Bank of Vanuatu. Accounting, reporting, payment of duties - this, as they say, is the default.

The term for consideration of an application for a license is from 4 months.

It is worth considering that when obtaining a license, the regulatory authorities - and this applies not only to Vanuatu, but also to all other countries - carefully check the company owners, directors, managers and those responsible for the procedures, security and so on.

They will check the origin of the funds, the history of each top manager and a business plan in which you describe the structure of your work.

Dominica Banking License


Dominic's offshore jurisdiction also offers the registration of international banks. A local license allows you to conduct any banking activity: open accounts, conduct transactions, issue loans and so on.

To obtain a license, you will need to register a local company, prepare a business plan, prove that your funds are of legal origin. Statutory fund - from 1 million US dollars.

Authorities are required to provide documents that prove that the bank managers are competent specialists, and owners with a net reputation and capital.

Financial license in Lithuania


Perhaps, it is the Lithuanian license that is currently one of the most popular with various financial startups. This is due to several factors:

  • The relative cheapness of the license;
  • License holders are controlled by the Central Bank of Lithuania and in many ways this license is similar to a banking one;
  • The license is suitable for a variety of types of business: electronic money, payment systems, peer-to-peer and others;
  • Access to the market of the European Union;
  • The license allows remote customer identification;
  • The application can be submitted before the registration of the company and create it only after confirmation.

Obtaining a license takes about 6 months. High requirements are put forward for company managers: reputation, education, experience. The authorized capital depends on the type of license: EMI - 350 000 EUR, PI - 125 000 EUR.

Malta Electronic Money License


In Malta, you can obtain an EMI type license - Electronic Money Institution. Features of this jurisdiction:

  • Statutory fund from 350 000 euros;
  • Clear requirements for a company that wants to get a license;
  • Malta's focus on modern technologies and solutions, including at the legislative level;
  • Member of the EU, which means the license is valid throughout the European Union;
  • The term for obtaining a license is from 3 months.

Banking License for Saint Lucia


In Saint Lucia, you can obtain an international banking license of two types:

  1. Class A - international activities are permitted with third parties. Statutory fund from 1 million US dollars;
  2. Class B - a limited license that allows you to work only with those customers who were declared at the time of obtaining the license. Statutory fund from 250 000 US dollars.

It will be required to prove the legality of the funds, provide information about the owners and managers of the bank.

In some cases, liability insurance of more than $ 500,000 may be required.

It is forbidden to conduct business with residents of Saint Lucia.

Registration of a payment institution in the Czech Republic


The Czech Republic is a European country in which several large payment systems are already operating. You can also get a local license.

To do this, you need a local company. Share capital depends on the types of activities:

  • The main activity is 20,000 euros;
  • The main and the provider of electronic communication services - 50,000 euros;
  • Provider of a full package of services, including the reception and issuance of cash - from 125,000 euros.

Also, personnel, technical capabilities and procedures must be available to comply with the requirements of the law.

Financial license in Estonia


At some point, it was the EMI license in Estonia that became very popular. It was called a crypto license, and many entrepreneurs rushed to get it, especially since it was relatively simple.

However, later many had problems opening accounts, since in Estonia it was impossible to open an account for a company not related to Estonia. We helped to resolve this issue and now the situation is many times simpler - there are a variety of business solutions with a similar license.

License holders can provide payment services, provide loans, create payment systems, and more.

Authorized capital - from 350,000 euros. Consideration of an application for a license takes 6 months.

***

These are not all existing solutions. For example, you can obtain a banking license in Sierra Leone or in the EU. Sometimes you can buy an existing bank, for example, in Panama or another part of the world. This moment is always better to discuss with experts, taking into account your tasks, target market and stock of capital.

Installation of technical and software for online banking


The next step is to launch an online bank. Today it is not even necessary to have a physical representative office of a bank in order to start providing services. Everyone has before them the example of Revolut or its older competitors - PayPal, Transferwise.

Having a financial license, you can go in two ways:

  • Create your own infrastructure, write code or buy ready-made solutions, installing on your hardware;
  • Or use someone else’s infrastructure.

The first path is the path of large players who have a margin of safety, resources for massive investments, often comparable to the price of a license. It takes time to start.

However, today you can delegate a lot, including creating your online bank and launching the project in 2-3 weeks.

Yes, thanks to the so-called white label solutions, you can launch your own Internet bank, add a mobile application to it and all this in a period of about one month.
The best part is that your customers will not even know that you are using third-party services. In addition, a large amount of headache is immediately removed for you to ensure the functioning of the system. All technical and partly legal issues (for example, customer verification) are resolved by the software vendor.
You create a product, offer it to customers, and other people are involved in logistics, inspection and maintenance. For the good of your business.

Customer search


At this stage, you are already connecting all your saved from the previous point of power and direct them to attract customers, to build relationships with them. And the more customers you have, the more promising your business.

*** The
banking business, or rather the “banking business”, has become easier and more affordable for entrepreneurs today. Fintech projects compete on a par with banks and often offer convenient solutions, beating banks on their own field.

You can join this game and do it in a short time. Why not give it a try?

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