Perhaps, you are a part of a financial institution that wants to operate their own banking. Or maybe you have a business or a crowdfunding company and would like to open financial accounts for your customers. Or you are a currency exchange business that needs a secure and reliable software solution. Any of these cases imply that your business plan involves starting your own bank. An own banking solution will not only provide you with a competitive advantage and higher customer satisfaction due to the convenience of your business services but also raise company liquidity and additional profit. The idea is great and you are ready to pursue it. We collected all the steps you need to take in order to start your own banking.
1. Develop a Technical Solution
More than 80% of customers are turning to digital ways to access banking services (McKinsey, 2019). That means, in order to provide a convenient and competitive banking solution for your clients, it is crucial to develop a technical solution for it. There are two ways to do it:
- Develop your own software: Have a clear vision of what exactly you want to achieve with banking solutions and analyze the feasibility of a software development project. Creating your own banking solution will require you to bear in mind technical, economic, time, and operational aspects. Keep the number tripled in your head as finding the right developers, choosing the right platform and technology stack, creating specifications, setting a budget, and finally creating it will require a lot of time and both financial and emotional investment.
- Get a ready-made solution: If developing your own banking software is not feasible for your business, there are SaaS (software as a service) solutions that provide ready-made banking software for you to use. For example, Crassula has a ready-to-go white label banking software platform that only requires a couple of days to be implemented into your business. The SaaS model allows you to save the costs by providing full support with a monthly fee that is much less than having a full IT and operations team. The platform allows administrating all customers in the admin panel, while they can perform their daily banking through modern and user-friendly interfaces available on web and mobile.
2. Choose Service providers
You are most likely not alone in wanting to create your own banking solution. It means that to build a competitive advantage and to differentiate, you might want to implement unique services into your solution. The most efficient way to integrate the services you need into your flow is to choose a software provider that already offers all the integrations you need. For banking products, the must-have integrations are:
- Allowing your customers to make IBANs and SEPA & international transfers. For that, you might need to cooperate with real banks and financial institutions.
- FX providers in order to accept, buy, and sell different currencies.
- Card issuers: offer your customers the freedom to buy online and offline by providing virtual and plastic cards.
- Crypto services: With cryptocurrency appearance and their growth in popularity and adoption, it is necessary to consider implementing crypto payments in your banking solution. Such services may include cryptocurrency exchangers (to exchange crypto to fiat money), crypto wallets (to hold the crypto), blockchain monitoring (for security), and more.
Depending on the products and services you would like to offer to your customers, choose providers accordingly. When choosing a software, the best platform should ensure that you are having a unique banking product and help you with recommendations on service provider selection. Crassula has 40+ integrated partners, giving you the full freedom to define your product. For faster market penetration, you can choose from partners that are already integrated within the Crassula platform. Alternatively, a partner integration of your choice is also possible.
3. Get a License
Since banking is the most regulated industry, there are a lot of legal requirements it has to comply with. Without all the necessary licenses, it will be illegal for a business banking solution to operate. In order to launch your own banking, you will be required to get a SEMI (small electronic money institution) or AEMI (authorized electronic money institution) license.
Without these licenses, your business is at risk of having large fines or being shut down. A solution for licensing could also be to sub-license. Crassula has a variety of partners, which they can connect you with and make recommendations of the best cooperation for sub-licensing.
4. Manage risks
Having an appropriate license is only the beginning part of what the bank has to take in order to minimize risks and ensure security from the customer and governmental institution side. Other measures that are required from a banking solution are:
AML/KYC: Know Your Customer (KYC) is a part of Anti-Money Laundering (AML) measures that are aimed to prevent money laundering and fraudful behavior. KYC is the process of verifying your customer identity. It is a part of the onboarding process, where a customer is required to prove their identity by providing ID documents. AML is a broader term, which implies processes that eliminate financial crimes and terrorism financing through monitoring. It is crucial for banks to comply with AML/KYC regulations and provide full security measures during onboarding and transaction monitoring processes. Using software like Crassula will help you ensure a smooth client onboarding and monitoring that will correspond to company compliance, thanks to integrations of KYC service providers in the platform.
Avoiding transactional risks: A regular and consistent monitoring of transactions, unusual activities, and accepting or rejecting new customers according to the risk rating will prevent suspicious activities in your banking solution.
5. Set-up your back office and support team
Delivering outstanding service to your customers requires not only a team of great professionals but also well-structured management. Crassula platform will ensure that your customers are served quickly and professionally. The platform provides you with an administrative panel, which is an easy-to-use tool for daily management. The panel allows you to define access roles and administrators in your team, access to client data and transactions, monitor the activity. On top of that, it allows keeping accurate accounting records and conveniently stores legal documents for easier compliance, which is not only important for the tax filing, but also for the understanding of your income and expenses.
There are many ways to differentiate and provide a unique banking service for your customers. In order to make your banking solution successful, there are certain requirements that have to be met, which on top of that depend on how quickly you would like to address the market. Having your own banking requires a deep understanding and knowledge of the industry, regulations, and financial service industry. When managed successfully, the growth potential for banking is very optimistic. No matter the demanding and harsh industry, it still offers an opportunity to decide: whether to build the banking solution on your own or address a technology provider that could develop it for you and assist with recommendations and expertise. The choice is yours: you can spend months developing banking software from scratch, or you can make use of this time to focus on business development and market penetration by using banking technology from Crassula. Not only it saves you time and money, but it also allows you to create a product that is uniquely yours: with the fully-branded interface and over 40 service integrations that you can choose from.
Visit https://crassula.io/ to learn more about how we can help you.
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