Okay, so you have decided you want to be a bank.
Now what? In this blog we look at our banking licence experiences, and look at the main lessons that we took away.
Becoming a fully authorised bank can be a long and drawn out process, with many challenges to overcome along the way, nevertheless we've selected our 5 key pointers for navigating the process...
- Nail down your
Business Model: In terms of preparing and drafting your licence
application and business plan (RBP), everything stems from your
target proposition and business model.
Selecting the products you want to sell to which customers will determine the key fundamentals of your application, as this drives your regulatory permissions, your capital and funding requirements, your approach to risk management, your market intelligence and your governance structure. If you can nail down your business model and be confident in your proposition this will aide you enormously in driving through the application process. From our experience, it is those firms who are confident of their proposition and that bed down their model early that will avoid diverting off road.
- Follow a clear, structured and well thought out plan: We know the old maxim "every plan will change", but it is important to have everyone singing off the same hymn sheet. Getting a bank licence can be a long and challenging process, with big deadlines (submitting the full application!) coupled with regular information requests that can often distract and take away resources at key times. Strong project management skills and a clear plan are vital. Working backwards from your intended go-live date, work out how long you intend to spend on mobilisation, how long it will take for submission and all the other steps required to formulate a clear plan. Then communicate this plan to everyone - including the PRA/FCA – to ensure everyone knows your timelines too. Then, working as a team work together to hit these deadlines and be transparent when timelines may slip. Following a clear and well thought out plan will enable all parties to have a clear sight of timelines and work together to each of them.
- Treat the regulators as your top customer: One of the key lessons is to maintain strong and transparent relationships with the regulators – this will definitely benefit you in the long term. Remember, granting bank licences is a long and challenging process for both regulators too! Working together as a tripartite will help each interested party complete their objectives at the right time. Be open and honest - if something is going to take longer to finalise than previously anticipated, let them know. No-one likes to receive something that hasn't been fully completed just to hit a timeline, so be transparent and tell them where you are having issues. The smoothest journeys we have witnessed are where the applicant bank, and both regulators work together and understand each other – like you will treat your future top customers!
- Really sweat the details: Did we say the application process was comprehensive? Throughout the submissions, information requests, meetings and challenge sessions, the list of questions and queries will appear never-ending. Nevertheless all requests must be answered and usually in great detail. While tying in with our next point below, the PRA and FCA will expect your subject matter experts to really know their stuff – so bring in the right skill set and resources and empower them to know their area. It is vital that applicants know the details and demonstrate to the Regulators that they are on top of their area of expertise.
- Get the right skills at the right time: we've said it before, you will need resources with key skills and experience to help you achieve authorisation. However, these resources and skills may not be the skills you need once you have gone live - someone who is skilled at writing a business model might be different to the person who is going to be running the show. Likewise the regulators will raise different questions and challenges throughout the application and mobilisation phases. Nail down your resource plan so that you bring on board the right skills at the right time. You will need risk management and capital and funding resources, but you will also need project and technology experts to ensure your launch goes to plan.
So there you have it – our top tips for getting across the line. Let us know if you need any help!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.