virtual bank business plan

Building a digital-banking business

The digital revolution in banking has only just begun. Today we are in phase one, where most traditional banks offer their customers high-quality web and mobile sites/apps. An alternate approach is one where digital becomes not merely an additional feature but a fully integrated mobile experience in which customers use their smartphones or tablets to do everything from opening a new account and making payments to resolving credit-card billing disputes, all without ever setting foot in a physical branch.

More and more consumers around the globe are demanding this. Among the people we surveyed in developed Asian markets, more than 80 percent said they would be willing to shift some of their holdings to a bank that offered a compelling digital-only proposition. For consumers in emerging Asian markets, the number was more than 50 percent. Many types of accounts are in play, with respondents indicating potential shifts of 35 to 45 percent of savings-account deposits, 40 to 50 percent of credit-card balances, and 40 to 45 percent of investment balances, such as those held in mutual funds. 1 1. “ Digital Banking in Asia: What do consumers really want? ” (PDF–690KB), March 2015. In the most progressive geographies and customer segments, such as the United Kingdom and Western Europe, there is a potential for 40 percent or more of new deposits to come from digital sales by 2018. 2 2. “ Strategic choices for banks in the digital age ,” January 2015.

Many financial-technology players are already taking advantage of these opportunities, offering simplified banking services at lower costs or with less hassle or paperwork. Some upstarts are providing entirely new services, such as the US start-up Digit, which allows customers to find small amounts of money they can safely set aside as savings. 3 3. “ The fight for the customer: McKinsey global banking annual review 2015 ,” September 2015.

A new model: Digital-only banking businesses

While it’s important for banks to digitize their existing businesses, creating a new digital-only banking business can meet an evolving set of customer expectations quickly and effectively. This is especially true in fast-growing emerging markets where customer needs often go unmet by current offerings. The functionality of digital offerings is limited, and consumers frequently highlight low customer service at branches as a key pain point.

So how should banks think about a digital-only offer?

Because banking is a highly regulated industry and a stronghold of conservative corporate culture, there are tremendous internal complexities that need to be addressed. These include the cannibalization risk to existing businesses and the need to foster a different, more agile culture to enable the incubation and growth of an in-house “start-up.” The good news is that our work shows it is feasible to build a new digital bank at substantially lower capex and lower opex per customer than for traditional banks (Exhibit 1). This is due not only to the absence of physical branches but also to simplified up-front product offerings and more streamlined processes, such as the use of vendor-hosted solutions and selective IT investment, that reduce the need for expensive legacy systems.

Six success factors to build digital-banking businesses

Based on our experience helping more than 20 institutions evaluate, design, and build new digital-banking businesses, we have identified six critical success factors that banks will need to address to ensure a quick and successful launch.

1. Focus on where the real value is

Launching a successful new business requires complete clarity about what its value drivers are. While this might seem like an obvious point, we find it is often overlooked. Instead, there is a temptation to copy or replicate existing models. For instance, mBank, Poland’s first digital bank, has succeeded by offering consumers access to unsecured personal loans and other simple products. It’s a model that works in countries like Poland and the Czech Republic, where credit cards aren’t popular, but may not be successful in some other markets.

Banks also tend to take the view that one solution can work for an entire region. Unfortunately, this approach misses significant value opportunities. A granular, country-by-country analysis of revenue per retail banking customer, for example, reveals significant differences in product opportunities (Exhibit 2). Breaking it down further by different customer segments or sub-segments highlights even starker differences that can inform a business strategy. Some 43 percent of banking customers in Taiwan, for instance, are open to digital-investment options versus just 17 percent in Australia.

Another critical element that varies by country is the state of regulation (for example, the requirements for paper-based documents and forms) and the associated infrastructure (such as the availability of a universal national ID). China, for instance, has become a leading innovator in digital banking in part because of a favorable regulatory environment.

2. Constantly test to refine the customer experience

Launching a successful new digital-banking business requires a marriage of traditional consumer research and a deep, real-time understanding of the behavior and pain points of individual customers. This means a constant and rapid stream of prototypes starting with the Minimum Viable Product (MVP) and subsequent iterations in order to figure out what will make the customer experience superior across all touchpoints. This sort of “real life” testing is critical for identifying what customers actually value as opposed to what they might say they value. It also yields up to 70 percent fewer defects and errors. 4 4. Numetrics industry software database.

One company, for instance, approached the creation of a digital-banking business targeted at emerging-markets millennials with a hypothesis that it would be critical to allow customers to sign in with their social-media accounts. Deeper interviews with customers and many versions of the prototype (100 to 150 screens for structured consumer research and feedback loops) revealed this was not true. On the contrary, urban and educated millennials have significant security and privacy concerns about any link between their finances and social networks. So instead of the social media sign-in, the team embedded visual security cues into the customer-onboarding process.

3. Organize for creativity, flexibility, and speed

Building a business using a constantly iterative approach requires a way of working that banks typically aren’t used to. There are three areas where a different way of operating needs to be nurtured.

• Cross-team collaboration. The core group building the digital bank should have a solid understanding of not just the new technology architecture, but also of the bank’s design and brand and the economics of its business model. This includes full-time members, as well as temporary talent in critical areas, such as compliance. From here, the team can gradually scale up to include more staff from technology departments. Portugal-based digital bank Activobank, for example, started with a management team of six to eight people during the design of the digital business model and then scaled up to more than 30 during implementation (excluding line/operational roles).
• A ‘garage like’ working environment. While an actual garage isn’t necessary, a physical space that provides a nurturing environment for creative thinking and prototyping is. This means open spaces, plenty of whiteboards and worktables where people can congregate and work together, as well as habits that foster innovation, such as so-called sprints. In a sprint, all the individuals involved in the development of a digital bank—developers, IT-security, compliance, risk-assessment, and marketing staff who understand the needs of the customer—get together in one room for several live brainstorming sessions. Instead of the lengthy back and forth that normally happens between departments, this allows for quick and efficient decisions about the technical specifications of the product. This process can truly deliver acceleration to working results. Sprints—from whiteboard to working version of the product—can happen in as little as four weeks. On average, companies see a 27 percent higher development productivity. 5 5. Numetrics industry software database. For example, Orange Bank took approximately eight months from strategy to launch of version 1.0 of its digital offering, prioritizing time to market and limiting changes required to their core banking system. Additionally, they were able to quickly scale up, acquiring up to 800,000 customers in the first eight months of operations. One critical requirement and advantage of this approach for banks is the way it allows compliance and risk-assessment staff to get in the room early and take on the roles of enablers and problem solvers, instead of gatekeepers who are often looped in only after plans are well under way or even completed.

A central ‘control tower’ team. Launching a digital bank is a juggling act, with multiple miniprojects running at the same time, such as a new credit card, decisions about hiring, development of the organizational structure, and the creation of a brand. It is the job of the control-tower team to make sure all these projects are coordinated by moving resources to necessary teams quickly or prioritizing initiatives so that timeline targets can be met. The team must work to identify bottlenecks—such as vendors who don’t respond rapidly enough to requests or IT not having enough storage capacity for data—and then either quickly resolve them or refer the problems upward to the CEO or the board.

The members of this team should be exceptional project managers with experience running large-scale projects, a high comfort level with agile development and sprints, a good working knowledge of the big picture, and a clear understanding of relevant regulatory issues.

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4. create an ecosystem of partnerships.

Successfully launching a new digital-banking business requires quickly acquiring a critical mass of customers. Two industries with large amounts of digital customers who can help the process are e-commerce marketplaces and telecommunications. E-commerce players can be useful partners because they present an opportunity for banks to create lending services for the site’s existing customers, both consumers and small and medium-size merchants. There’s a clear benefit for the e-commerce player, too, since easy access to financing on an e-commerce site is an enticement for working-capital-constrained, rapidly growing small businesses to keep selling on that site. Likewise, if consumers know there is financing available, decisions to buy large-ticket items such as refrigerators or TVs become much easier.

The success of Alibaba’s Ant Financial in China, which serves small businesses and has grown into a $20 billion business in two years, illustrates the value of a bank/e-commerce union. Offering simple ways to get loans, Ant Financial has rapidly become one of the biggest lenders to small businesses in China. Although now owned by Alibaba, it originally started as a partnership with CCB and ICBC in 2007.

5. Build a two-speed IT operating model

To implement the test-and-learn approach and short release cycles that are so critical for launching and operating a competitive digital bank, two different yet integrated IT systems are needed: the traditional, slower, secure and stable, transaction-focused legacy back end and a rapid, flexible, customer-centric front end.

The customer front end should be designed by small, nimble product teams (usually fewer than ten people) using an agile, sprint-based development approach. Software release cycles for these customer-facing elements should be modular and designed for quick deployment, prioritizing a minimum viable solution that will evolve over time.

To reduce the time needed to build the two-pronged system, a combination of customized and out-of-the-box functionalities can be used. One new digital player combined existing functionalities from their front-end provider, such as peer-to-peer payments, with new features that consumers care about but to which they don’t have a lot of access, such as personal-finance modules where they can track their expenses and set savings goals.

To the extent that the existing IT architecture and regulatory framework allow, a variable-cost model should be considered, such as cloud-based system or data-storage solutions. A number of solution providers are expanding into emerging markets to offer competitive alternatives to traditional high-capex investments in data centers. Adopting a cloud-based solution allows a new digital player to scale up its cost structure along with revenues, thus achieving a faster breakeven point. It also adds further flexibility, especially if the architecture is designed with open APIs to enable collaboration with potential financial-technology partners who already operate from a cloud-based environment.

6. Get creative with marketing

Since digital-only banks don’t have the same customer-acquisition opportunities as legacy banks with branch networks, marketing is a major cost, representing 25 to 35 percent of total operating expenses. This is true even for legacy banks that create digital start-ups, since the new entities must clearly differentiate their brand and value proposition from the parent operations’ if they want to be successful. Digital-only banks will likely be targeting a younger, more digitally savvy customer than incumbent banks. AirBank, for instance, which launched in the Czech Republic without the backing of an existing bank, tagged itself as the “first bank you will like” and promised that all customer communications would be jargon-free and all fees clearly outlined in one simple document.

To communicate such distinct selling points cost-effectively, banks must cultivate word-of-mouth recommendations and feedback through social media. This entails going after customers in a much more targeted way than banks are used to, both with an understanding of how to maximize value according to geographic distinctions (focusing on Twitter in Jakarta and WeChat in China, for instance) and specific customer niches (for example, buying ads on Facebook for millennials who play golf).

One particularly creative marketing example is a promotion that China’s successful messaging app Tencent’s WeChat ran during the Chinese New Year holiday in 2014. To promote its WeChat Payment service, which allows peer-to-peer transfer and electronic bill payment, the company launched an app that allows users to send a specific amount of money to a certain number of friends, with the app randomly assigning the money. To redeem and see how much money you were sent, recipients had to sign up for a WeChat account. WeChat’s virtual envelopes went viral because they added an element of suspense to the tradition of giving gifts of money in red envelopes during the New Year. In two days, the company got 200 million of its existing and new users to link their bank cards to their account, a feat that took Alibaba’s Alipay eight years.

Launching a new digital-banking business enables banks to rapidly drive value creation. A combination of leveraging smart technology solutions and incorporating the critical success factors outlined above can help banks do this in an accelerated manner.

Sonia Barquin is a consultant in McKinsey’s Kuala Lumpur office, and Vinayak HV is a principal in the Singapore office.

The authors would like to acknowledge the contributions of Somesh Khanna, a director in the New York office and a global leader of McKinsey Digital.

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Starting a Digital Bank – What Does it Take?

The COVID-19 pandemic has rapidly accelerated the digitization of banking and innovation in new FinTech services.  Customers are continuing to move online and this radical transformation is unlikely to reverse.  As a result, we’re seeing more and more FinTech companies and digital banks coming to market. If you are looking to start your own digital bank or any other FinTech services company, read our short guide about the most important steps for launching your digital bank, including a timeframe for each step.

Figure 1: A standard timeline for launching a digital bank

Step 1: Developing a Business Model (1 – 3 months)

The first step in this process is to come up with a robust business model that will work over the long term.  The best way to do this is to create a business plan that details all the relevant strategic information and decisions that will help clarify what your digital bank or FinTech company is going to look like.  Ideally, this is a living document that contains specific action steps for the short, medium, and long term respectively.

This business plan is a key document when you interact with investors and regulators because it gives a clear strategic plan of where you want to take the business and how you’re going to compete in the marketplace.  Focus on making it as clear and understandable as possible, so that all stakeholders can easily grasp what you’re aiming to build.  This is the first thing that regulators and investors will use to evaluate your business proposition and the risks involved.

Business plans can vary depending on the context, but some key components that are always required include a vivid description of your target audience, details about the product solutions you want to offer, a unique value proposition that sets you apart from the rest, and 3 years of financial forecasts that show how you are going to manage any capital that you receive. 

Step 2: Form the Company and Open an Office (1 - 2 months)

Depending on which jurisdiction you’re in, you might need to register your company as a legal entity and open an office of some sort before you can apply for a Payment Institution or E-money institution license.  Other regulators (like in Spain for example) only need you to reserve a company name before you can apply for a license.  So, it’s worth checking in with your regulator to understand the specific requirements.

When it comes to setting up an office, a regulator will tend to deem one as a place where management comes together to make executive decisions.  This cannot be a co-working office space but must be an actual physical office with local employees.  This shows the regulator that you are serious and are ready to start operating.

Step 3: Obtain a License (6 – 8 months)

The simplest way to start operations is to become an EMD/PSD agent of a licensed company, but if you have big business ambitions and plan to grow, then choosing license shelter can be only a temporary option and you will need to receive your own E-Money or Payment Institution license. 

Here is a step-by-step guide to obtaining your E-Money or Payment Institution license:

a) Introduction to the Regulator

Certain regulators like in Lithuania, Latvia, or Spain will invite candidates to a pre-application meeting where they will need to answer some of the following questions:

• What is the planned business model and what services are planned to provide?
• Who will be the parties involved, and what functions, rights, responsibilities they will have?
• What will be the client base of the company?
• What is the structure of the company and the founding team?
• Where does the capital come from, or what are the origins of the funds?
• How your business is stable from a financial perspective?
• Depending on the business model and customer base – the AML topic will also be covered.

Based on those answers, if you meet the requirements you can then start preparing all the relevant documentation.  Note, that this step doesn’t apply in all jurisdictions.  For example, in the UK you would need to begin with preparation of all the documentation without meeting the regulator.

b) Prepare and submit your documentation

This step is crucial but can be quite overwhelming due to the nature of the paperwork required.  Do not expect to prepare all the documents yourself.  For this stage, you will need the assistance of a consulting company like Advapay and experienced lawyers to ensure that you’re aligned with everything that the regulator requires.  Once all the documentation is submitted, it’s likely that the regulator might come back with questions and requests for additional documentation – so prepare for a back and forth process until you get it right.

c) Form your team

Once your company has a clear business model and a selected jurisdiction, you then need to get some employees in place.  Depending on the regulator, you may need between 2 and 8 people at the beginning.  Bear in mind that it can take a long time to find experienced staff to join you, so it’s worth getting ahead of this if you can.  You will also have to submit documentation about your key personnel  to the regulator as part of the process.

d) Open a business and safeguarding accounts

Next, you must open the business and safeguarding accounts and to show the regulator what measures are being taken to safeguard your client funds. The process can take up to 3 months or even longer and so we typically advise that you utilize the services of a consultant who can help you deal with this process, rather than doing it on your own.

e) Pay the Initial Capital

The next step is to pay initial capital to meet your regulator’s requirements.  Depending on the type of company you choose – an E-Money or Payment Institution - you will need to invest not less than 350 000 EUR or 125 000 EUR respectively. This might need to be done before the application process, but typically it occurs after all your documentation has been submitted and approved.

f) Authorization and Passporting (for EU countries)

The last step is to receive the final confirmation from the regulator that your license has been granted and that you’re legally allowed to provide the specified services.  If you’re based in the EU and plan to operate in different EU countries, you will need to apply for passporting to operate in these specific countries.

Step 4: Prepare Your IT System for Operations (from 3 months)

Now, it’s time to set up your IT system.  When submitting your application for a license, you need to declare the Core Banking system you plan to use during the licensing phase to the Regulator and submit all required documentation about this platform.  It can be your own developed platform or purchased from a software vendor, e.g. Macrobank Core Banking.

Many regulators require a ready operating system on the date that the license is issued.  Others give a year for ‘go live’ after which, an audit must be completed in order to receive an operational permit.

Step 5: Develop Your Business Infrastructure (from 3 months)

Now that you have a license and your IT system is in place, you can start developing your payment infrastructure and creating partnerships. 

Start with activation of your safeguarding account (if you have opened the safeguarding account during the licensing stage) and open additional safeguarding accounts – as this will help you to offer broader services to your customers.

Then you need to decide how do you plan to issue IBANs to your customers – you can obtain a BIC number through SWIFT or find an IBAN sponsor.

As soon as you have developed relationships with bank(s) and can issue your IBANs, you can start your business.  For the next step – you will need to develop partnerships with payment and other external service providers, for example, currency exchange providers, card issuers, AML/KYC solution providers.  All these solutions must be integrated with your Core banking system via APIs.  As an alternative, you can buy a Core Banking platform with ready integrations with different service providers.  This saves a lot of time and money – allowing you just to sign agreements with these service providers and get started as quickly as possible.

___________________________

As you can see it's not an easy proposition to launch your own FinTech company or digital bank from scratch, but if you work systematically though each step and get the right advice from industry professionals, then you can make it happen.  Follow this guide and you’ll have your  own digital bank in the very near future.

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• Oct 29, 2022

How To Build A Digital Bank: Overcoming Barriers to Entry in Financial Services

Updated: Oct 29, 2023

Strategies and Solutions for Establishing a Successful Digital Bank

What are the key considerations and requirements for building a digital bank?

In 2018 I joined a firm with a mission to build a new digital bank led by visionary leaders . It was a fantastic time, learning how to build a digital bank and gaining experience working in a start-up focusing on innovative design.

Since then, many people have asked me, how do you build a digital bank? What is a bank license? How much money do you need? What are the barriers to entry? This three-part blog covers the things I learned and hopefully the answers to these questions. Building a new digital bank can be a complex and challenging process, but with the need for digital banking services on the rise, it can also be a rewarding venture. We cannot cover every part of that in this series, but I hope these blogs give a sense of what is required to build your bank. If you need additional details, give me a call.

What regulatory reforms in the UK led to the rise of challenger banking and fintech innovation? In 2013 the UK set out reforms to open up financial services to new banks by reducing some of the barriers to entry, thus encouraging further competition in the industry. The changes made to the authorisation process and banking regulation created a wave of new banks, often called challenger banks or neo-banks.

This reform period created an environment ripe for business innovation in the financial industry. The changes made to the authorisation process and banking regulation reduced barriers to entry, encouraging further competition in the industry. This led to the emergence of challenger banks or neo-banks and a wave of fintech technology (fintech) and regulatory technology (regtech) firms releasing innovative products and services such as stand-alone products for identification, credit scoring, fraud prevention and payments. The fintech companies have simplified integrations and the use of cloud technology have helped reduce the entry barriers for new challenger banks and enabled fintech and regtech firms to create partnerships to deliver new digital products and business models, thus spurring business model innovation. As a result, non-financial services firms have also seized opportunities in embedded finance, leveraging their brands and distribution channels to offer bespoke financial services to their employees or customers while streamlining their business operations.

What is the process for obtaining authorisation as a new bank in the UK? Congratulations on deciding to become a digital bank or a challenger bank, you have a brand, a strategy and some great product ideas, but where do you go from here? Before we start, it’s worth looking at the banking license or the absence of one. Because strictly speaking, there isn’t an actual banking license, a certificate that you can hang on your wall. A bank license is, in fact, an authorisation “ Part 4A Permission to carry on the regulated activity of accepting deposits, etc.” (FCA Handbook) . You could, of course, frame your PRA/FCA letter of authorisation.

Authorisation starts with the ‘new bank start-up unit’. This unit was created by the UK regulators the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) to support new entrants through authorisation. The aforementioned streamlined authorisation process is called mobilisation. Mobilisation allows new entrants to become authorised at an earlier stage but with certain restrictions in place. Sometimes this is referred to authorisation with restriction or AWR.

Mobilisation is a trade-off. On the one hand, it limits the amount of business you can undertake (total of £50,000 in deposits). Still, on the other hand, it provides the confidence of being an authorised bank to seek additional funding and additional time to fully build out the bank’s technology and hire new staff. However, the expectation is to come out of mobilisation within 12 months. This process is called variation of permissions or (VOP). It features several steps and requirements to become a fully operational digital bank.

OK, how do I apply for authorisation?

What is a Regulatory Business Plan (RBP)? The RBP is at the heart of your application. It details your business model, products, financial resources, how you plan to make money, your customer base, the customer journey, technology and operations, to name a few. Yes, that’s a lot of pages! The RBP is a detailed and complex document, and as the FCA points out, this should not be a ‘sales pitch’ for use with potential investors.

A benefit of mobilisation is that certain parts of the RBP like technology, risk management and the digital bank’s policies and procedures only need to be drafted. While this may buy you the additional time you do need to document your delivery schedule in a fully developed mobilisation plan, and this requires signoff by your board. Let’s take a look at some of the sections of the Regulatory Business Plan.

What should be addressed in the Regulatory Business Plan? Why do you want to be a digital bank? What is your target market? How will you compete? What is your competitive advantage ? What products and services will you be offering? Will you offer virtual debit cards? How will you distribute them? These and other questions need to be answered, demonstrating that your business will be viable and profitable,

Suppose you're taking the mobilisation route. A near-final version of these customers' needs must be established in the plan. The digital customer journey includes onboarding arrangements for your customer base, know your customer processes and anti-money laundering. Products (e.g. Loans or Current accounts) have a description of your products, pricing, target markets, distribution, assessment of the competition, and ensuring customer satisfaction.

What are the key considerations regarding capital requirements for new banks? Capital remains the hardest barrier to entry into financial services. For starters, you need to fund the building of your digital bank and then meet the minimum capital requirements to get authorised. Banks are required to hold a minimum of 8% capital. It aims to create proper management of the digital bank. It can be thought of as an insurance policy and preventing insolvency.

The intricate modelling process behind capital requirements is beyond the scope of this blog, but here is a simplified part of that. Each one of your products, e.g. loans or mortgages, will carry a risk weighting. The weight is defined by the regulator, the riskier the product, the higher the weight and consequently, the higher the capital you need to hold to cover potential losses. The 8% is taken from the total value of each product and its weights. Now if you multiply that by 12 months of projections, you have a large number that needs to be paid upfront and maintained at 8% at all times. Regulatory reporting monitors the compliance of this.

If this is prohibitive, then alternatives like an e-money license could be considered. However, this will limit the products you can offer the customer. Furthermore, under the Financial Services Compensation Scheme, e-money wallets are not protected. FSCS protects the customers of failed authorised financial services firms up to £85,000 for a single account and £170,000 for joint accounts. However, the e-money institution will have to safeguard the funds.

For a more detailed view the capital requirements, check out the Internal Capital Adequacy Assessment Process (ICAAP) used to assess the levels and risks to capital.

What is the Senior Managers Regime (SMR)? This details the structure of your digital bank, the board, the risk management framework and internal controls. The roles and responsibilities of the leadership team, the board and the committees (Exco, audit committee, risk committee and remuneration committee) to name a few.

Let’s look briefly at the team’s structure through the lens of Chief Information Officers (CIO) aspiration to report to the CEO. The regulators have defined a list of responsibilities for senior management to drive culture, governance and accountability. It’s called the Senior Managers Regime (SMR). Despite technology playing an ever-increasing role in finance, there isn’t a senior management function (SMF) for the CIO. Instead, the responsibilities of the Chief Operating Officer (SMF24) could be split with the CIO, and this will require the CIO to become authorised by the regulator.

What is the Complex IT Form? The application requires a ‘Complex IT Form’. It’s a self-assessment questionnaire that details, amongst other things, the nature and complexity of your technology, payment systems and settlement (more on that in part 2). Dependencies like outsourcing and the scale of digital banking operations, business recovery and escalation plans are in the firm. A high-level outline of your technology is in the regulatory business plan. We will cover this in more detail in the next blog post, but let’s take a quick look at outsourcing.

What are the Digital Bank Outsourcing Requirements? Chances are you will take several products from third parties leading to additional scrutiny. There are many operational risks associated with outsourcing your technology and operations. Regardless of the products or services you utilise, your digital bank will ultimately remain responsible! You will need to design your digital bank to mitigate any failures, let’s say in your cloud provider or your credit scoring process. Ultimately it’s essential to assess the risk of one company failing by looking at multiple providers or through backup processes.

To address these risks and ensure a resilient digital banking experience, incorporating design thinking methodologies can be invaluable. Learn more about design thinking and its application in digital banking.

The FCA has detailed the outsourcing requirements in their handbook, and you should ensure that any supplier your working with can meet these requirements. It’s worth noting that some suppliers may have alternative arrangements in place. One example is access to their business premises; they may not allow this but in some cases an annual audit document is satisfactory.

In the next blog we will look at some of the financial technology (fintech) and regulatory technology (regtech) components that can help build your digital bank. Until then have a nice cup of coffee and some Pasteis de Nata.

Ready to embark on the journey of building a digital bank? Our consulting services are here to guide you through the key considerations and requirements.

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Further reading (All sources checked June 2020) Bank of England New bank start-up unit Bank of England Internal Capital Adequacy Assessment Process (ICAAP) FCA Outsourcing and operational resilience FCA Handbook Financial Services Compensation Scheme

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• Digital Banking

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• Unlocking the Key to Online Banking Success: Top 7 KPI Metrics

Are you considering to launch an online bank business? In recent years, online banking has grown in popularity: it is convenience, reliability, and security that attract customers. According to the Financial Post, readers of their survey have reported a 79% satisfaction rate with their online banking experience in Canada. With an impressive economy, innovation, and the rapid growth rate of the banking industry, now is the perfect time to open an online bank.

Starting this business, however, requires a good plan and dedicated efforts. A substantial amount of work is necessary to setup a successful online banking service that will bring customers back. Here's a checklist that will help you make sure the process is successful.

The first step you will take is to specify your business mission statement and clarify the goals you want to achieve with your bank. You should conduct detailed research into financial regulations, competitors, and services. Precisely define the advantages you will offer your customers and explain the opportunity your bank will give them.

Gain an understanding of the market, its demand, and how exactly your online banking services may match it. Research potential competitors, how they present themselves, and what services they are offering. Analyzing the current situation can help you to formulate strategies to differentiate your services from theirs.

Draw up a comprehensive business plan that will include planning, cash flow, financial statement projections, and so on. This plan should receive approval from your investors and target your customers' needs. Create a plan that is realistic and provides measurable goals you would like to achieve.

1. Clarify Goal And Mission Statement

Before launching a online bank business, it is important to take some time and evaluate the goal and mission statement of the business. It is essential to have a clear idea of what the mission and goal of the business is before proceeding with opening it. The mission and goal should never be overlooked as these will be the guiding principles around which the entire business is built and operated.

When it comes to creating a mission and goal statement for the online bank business, the following elements should be considered:

• What is the primary objective? Is the objective to become a leader in digital banking? Do you want to revolutionize banking services with cutting-edge technology?
• What are the secondary goals? Is the goal of the business to provide superior customer service? To offer innovative solutions to banking issues?
• What unique value does the business offer? Does the business provide a platform for individuals to make their banking experience easier? Does the business offer convenience or value-added services?

Once these have been identified, the mission and goal statements can then be created, keeping in mind the primary and secondary objectives.

The creation of a mission and goal statement for a online bank business is an important part of laying the foundation for a successful business. It is essential to take the time to create a statement that accurately reflects the primary and secondary objectives of the business. This clarity will help the business understand its purpose and be able to focus its resources and energy on reaching its goals.

Tips & Tricks:

• Make sure the goal and mission statement accurately reflects the goal and mission of the business.
• The goal and mission statement should be clear and concise.
• Think about the unique value that the business can offer to its customers.

2. Research Market And Competitors

Before starting any business, it is essential to have knowledge about the market and competitors. When it comes to setting up an online banking business, research becomes the key. It helps to understand the different approaches that competitors are taking, grabbing market share, and differentiating their offers from other established providers of online banking services.

Know Your Competitors

In-depth market research can provide valuable information about the size and scope of the industry, trends, technological advancements, and customer behavior and preferences. But, it is also essential to understand the competitive landscape in the market with an emphasis on banks, payment processors, and other firms that are currently providing online banking services.

To do so, it is recommended to compile a list of competitors and perform a SWOT analysis on each. This should not only identify their offers and pricing but also their strengths, weaknesses, threats, and opportunities. Having a strong understanding of the competitive landscape at the outset can go a long way in allowing the company to make informed strategic decisions and differentiate themselves from competitors.

Perform A Market Gap Analysis

This involves understanding what products, services, and features are available in the market and what is lacking. Knowing what is presently on offer and where there is potential room to compete in the market can help the company identify a potential target market and the services that should be provided.

For example, if there is a need in terms of a mobile application or enhanced customer service, then the company could look to focus on these areas and provide something that other firms are not currently offering.

Tips & Tricks

• Stay up to date with market trends and developments in technology.
• Make sure to have an updated competitor list in order to analyze current trends.
• Assess the current opportunities in the market and develop strategies to capitalize on them.

3. Create Business Plan

Creating a business plan is essential for the success of every business. It gives an overview of how you are going to run and grow your business. It is especially important when starting an online bank. A good business plan should summarize your business goals, vision, and ideas. It should also address the financial and operational considerations that must be taken into account in order to ensure success.

When creating a business plan for your online bank, you should consider the following points:

• Business structure: What type of business will you be operating within? Are you a sole proprietorship, partnership, corporation, or limited liability company?
• Business purpose: What are the goals and objectives of your business? What problem are you trying to solve?
• Market analysis: Who are the existing competitors in the online banking space? How will you differentiate your services in order to gain a competitive edge?
• Financial projections: What is your startup capital and projected revenue? How much will you need to invest to grow your business to reach your desired return on potential investments?

It is important to ensure that the business plan you create is comprehensive and covers all aspects of running an online bank. Your business plan should be well-designed and structured in order to make it easier to reference and follow-up on.

• Start with collecting all the required information such as the organization structure, goals and objectives, legal requirements etc.
• While creating the financial projections, include both short term and long term goals.
• Involve your advisors and partners for professional advice on specific areas such as legal and financial.

4. Develop Financial Model

The financial model is the backbone of the business from an investor point of view. Creating a financial model for an online bank business has quite a few complexities, such as:

• Projecting user acquisition cost
• Modeling customer retention
• Projecting loan volume
• Analyzing the cost of operation
• Calculating the interest margin
• Predicting revenue streams

Developing a comprehensive financial model for a start-up is no easy feat. It requires thorough data mining, understanding of assumptions, and frequent model testing with various scenarios. This is a labor-intensive project and requires expertise to construct the model accurately.

Once the financial model is built, the startup team can start assuring investors of a complete and robust business strategy, as the model projects the viability of the business over time. This gives the investor confidence with the business case and hence encouraging them to invest in the online bank.

• Step 1: Start with a detailed research on the market. Understand the industry, the customer base, target markets, and revenue opportunities.
• Step 2: Collect as much financial data from the relevant sources as possible. This includes assessing customer profiles, loan applications, customer acquisition costs, operational costs, and more.
• Step 3: Use an excel spreadsheet to organize the acquired data and constructing the financial model. There are comprehensive tutorials available online which can be referred to.

Once the financial model is built, it is best to go through the model with the investor in order to give them a full picture of the business. Furthermore, entrepreneurs should give detailed explanations of the assumptions made while building the model so that the investor can gain better insight.

5. Secure Funding

When opening an online bank business, securing funding is an important step in the process. To get started, you will need to identify the type of funding you plan to use such as debt financing, equity financing, or government grants. It is important to remember that just because funds are available doesn’t mean that you should invest too heavily; it is wise to have a budget and stick to it.

Debt Financing

Debt financing is a great option as it allows you to get the cash you need quickly and without taking on the risk of giving away a large portion of your business. When taking out a debt financing loan, you are responsible for paying back the principal plus interest. It is important to choose a loan with a lower interest rate.

Equity Financing

When you choose to raise your capital through equity financing, you are essentially selling part of your online bank business to investors. This can be a great option if you don’t want to be locked into a long-term debt. The downside of this option is that you will have to give up some of the control of your business.

Government Grants

There are numerous government grants available for entrepreneurs who are looking to start an online bank business. It is important to research the different types of grants available to ensure you are applying for the ones that are best suited for your business model. Many grants also require documents such as business plans and financial projections.

• Remember to stick to a budget when raising capital.
• Choose a loan with a lower interest rate.
• Compile the necessary documents for applying for a government grant.

6. Acquire Necessary Permits & Licenses

Before starting a online banking business, the business must obtain the necessary permits from the national and local government. Business owners should consult their attorney or legal advisor to determine whether they need any government registration, permits, or special licenses to conduct their online banking activity.

Businesses might need to obtain a variety of permits from local, state, and national authorities, including business licenses, occupational licenses, and even environmental permits in order to open a online bank. Depending on the geography, business owners might also need to obtain local licenses from municipality or local government. State-level banking regulation varies from state to state, and may require additional permits and licenses.

Depending on the customers an online banking business intended to serve, it will likely need special permission from state and federal authorities in order to provide financial services. Banks must also ensure that they meet all the necessary legal and regulatory requirements, such as anti-tub laundering, Know Your Customer (KYC) policies, and other aspects of financial law. It is strongly advised to work with financial advisors and legal advisors to ensure that all the necessary steps are taken and all the necessary permits and licenses are obtained.

It is also important to note that states may have different requirements for online banks. For example, if an online bank is conducting business across state lines, the business will likely need an interstate banking license in order to provide banking services. As such, it is important to be aware of the state-specific regulations and requirements for online banking.

• Research your local laws to find out what type of permits and licenses you need to obtain.
• Consult with a financial advisor or lawyer to ensure that all the steps for obtaining permits and licenses are taken.
• Check with your state and local authorities to determine the business licensing requirements.

7. Assemble Team

Launch your online bank successfully requires help from a team of experts. Even if you have extensive experience in the financial service industry, it is wise to pull from a network of experienced professionals to help create the best bank business plan. Build the core team and determine whether you prefer to use in-house employees or outsource tasks based on resources, budgets, and skills.

Here are some tips for assembling an effective team:

• Identify key areas: Determine the core areas of expertise that your team needs to address and include in the business plan. This may include areas such as financial planning, technology, marketing, customer service, and legal.
• Recruit the right people: When recruiting the ideal team for your online bank, you should focus on professionals that have extensive experience and knowledge in the associated areas.
• Define roles & responsibilities: Clearly outline each team member's responsibilities in terms of tasks and judge their performance against specific milestones and deadlines. This will ensure consistency and help to keep the project on track.
• Encourage collaboration: Allow team members to work together and share ideas, opinions, and perspectives regarding the project. This will help to create a cohesive plan for launching the online bank.
• Ensure accountability: Ensure that each team member is held accountable for delivering on his or her assigned tasks. This will help to keep the project running on time and reduce any delays that could harm the success of the business.

Tips & Trics

• Communication is key: Good communication between team members is essential for the success of your project. Encourage everyone to speak up and open up about their ideas and concerns.
• Provide opportunity for feedback: Encourage everyone to give regular feedback on the project and the progress made by the team. This will help to ensure that all stakeholders are on board and that any changes can be discussed.
• Focus on team growth: Try to create an environment of growth and continuous improvement for your team. Engage regularly with the team members and see how you can leverage their talents and skills to benefit the project.

8. Develop Marketing Plan

An important part of starting a online bank business is knowing your customer and how to reach them. As the owner of a online-only bank, it is essential to build a marketing strategy that leverages the unique advantages of being online. This section details how to develop a comprehensive marketing plan for your online bank.

• Define Your Target Audience: Who are your ideal customers? Identify the demographics and psychographics (lifestyle, values, motivations) of the customers you want to reach.
• Understand Your Competitors: Research existing online banks and understand what makes them unique. Identify what sets your bank apart from competitors and use it to your advantage.
• Develop Your USP (Unique Selling Proposition): What are the aspects of your online-only bank that sets you apart from other banks? Use this to create a compelling USP for your business.
• Identify Marketing Channels: Decide how you want to reach your target audience. Options may include email, social media, search engine marketing, affiliate marketing, and more. Research the various channels available and select the ones that best fit your customer and product.
• Plan Your Budget: Estimate what portion of your budget you will dedicate to marketing efforts and establish priorities for these efforts.
• Conduct A/B testing of your marketing campaigns to determine which channels are most effective.
• Stay up to date on emerging trends and technologies in the industry to ensure your online bank stays competitive.
• Leverage customer feedback to develop a better understanding of your customers' needs and preferences.

9. Launch Website & Products

Once you have done the necessary prep work, you are now ready to launch your online bank. To do this successfully, you will need to set up a website, and register any products or services you will be offering.

Create a Website

Having a website is essential for any online business. You will need to create a site that highlights your business, and also provides information about your products and services.

• Choose a domain name that is simple and memorable.
• Register your domain name with a web hosting provider.
• Select a design template, or hire a web designer to create a custom website.
• Develop content for your website that clearly explains your business and services.
• Include contact information, pricing, and policies.
• Test the website to ensure that it is functioning properly.

Register Products & Services

It is important to register any products or services you plan to offer. You will need to register your products and services with the appropriate regulatory bodies to ensure compliance with governing laws.

• Determine the products and/or services that you will offer.
• Ensure that products and services meet the legal requirements for banking.
• Register the products/services with the necessary oversight and licensing organizations.
• Create a pricing structure that will attract customers, while also adhering to laws and regulations.
• Create an application process to begin servicing customers.
• Ensure all registration processes are completed prior to launching a website and products.
• Provide detailed information on your website about products and services.
• Make registration processes easy and simple.

10. Track Performance, Adjust Plan Accordingly

The importance of tracking performance metrics and KPIs within a business venture cannot be understated. This is especially true of a successful online bank venture. Having an effective mechanism in place to measure key performance indicators helps to identify areas of opportunity where the banker can improve operations so that they can continue to increase profitably. A business consultant must be able to help identify and set up these KPIs, as well as help manage and adjust the plan accordingly when necessary to keep the online bank venture running smoothly.

This process should include:

• Identifying the most important KPIs that should be monitored in order to detect potential performance problems or opportunities for improvement.
• Constantly reviewing and benchmarking the performance of key metrics and KPIs.
• Understanding the impact and relevance of the KPIs to the overall operation of the online bank.
• Developing an effective strategy to track and monitor KPIs on a regular basis.
• Continuously comparing performance between different areas and making necessary adjustments to the plan when needed.

When tracking performance metrics, it is also important to consider the impact of external factors, such as the changing regulatory environment or market dynamics, on the performance of key metrics. Business consultants should be able to help the online banker understand these external factors so that the appropriate adjustments can be made to the plan when needed.

• Prioritize KPIs: Establish a hierarchy of importance to determine which KPIs should be monitored more closely.
• Analyze the Data: Put the data from the KPIs into a format that's easy to understand and analyze quickly.
• Take Action: Take the information gathered to adjust the plan as needed to capitalize on opportunities or correct any potential issues.

Launching your own online bank business is a complex but rewarding endeavor. Establishing a successful online banking system will help your business grow and compete with the current market. By following the checklist we have created, you can make sure the process is smooth and successful. Clarify your goals and mission statement, do research on the market and potential competitors, create a detailed business plan, develop financial projections, secure funding, acquire necessary licensing and permits, assemble a team of experts, plan your marketing strategy, launch your website and products, and continuously track your performance and adjust accordingly. Doing all these steps will take time, but they are worth the effort if you want to launch a successful online bank business.

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The Ultimate Digital Business Plan Template & Tips

Article Snapshot

Traditional business plans are long, comprehensive and difficult, and they take a long time to prepare. It is a task that will require the development of assumptions and projections based on vision, objectives, market conditions, and competitive analysis.

This article aims to outline how you can modernise your business plan in order to create a digital business plan for the contemporary age. Before you get started, it may help to briefly recall the purposes that a traditional business plan serves. It is, in essence, a strategic document, and needs to:

• Set out clear business objectives based on information and analytical data.
• Present the viability of a business venture.
• Detail the assumptions on which a business prospect relies.
• Outline cash flow projections based on assumed sales, expenses, market data, and competitive analysis.
• Include resumes which outline the strength and relevant background and experience of the most important staff members including the business owner.
• Outline business and market strategies in case of setbacks and adverse conditions.

The traditional business plan is a selling tool used in negotiations with lenders, banks, and investors. You can also use the business plan to solicit feedback and advice from your lawyer, bank, business mentor, trusted business friends, potential customers, and small business organisations. Finally, the business plan is a tool for measuring income, expenses and profitability against projections made in the plan.

The Digital Business Plan

Market conditions are changing rapidly in response to technological advancements. For this reason, a business plan has a progressively shorter life-span and needs to be revised and updated more frequently.

Both assumptions and market data needs to be reviewed and updated at least annually and quite possibly quarterly. Two separate market conditions have changed expectations about strategies that must now be incorporated into a digital business plan.

• Business organisations must now embrace technology to remain relevant and competitive.
• Organisations must develop a digital strategy with particular emphasis on mobile technology and mobile applications.

These conditions have given rise to what is now called the Modern Digital Business Plan, and this type of digital business plan is dramatically reduced in size. Entrepreneurs may wish to use an application called StratPad to guide them through the process of writing a shorter plan.

What is a Digital Business Plan?

A digital business plan is an extension of your regular business plan that details how digital initiatives can contribute to the success of the vision, the goals, and opportunities contained in the business plan.

For example, consumers today expect to communicate with a company using a website, app or phone, and the strategies outlined in the business plan should facilitate such communication.

What Needs to be Included in a Digital Business Plan?

There are some aspects of a business plan that will be applicable to both a traditional business plan as well as a digital business plan, and these include:.

Vision - A business vision statement will outline that you wish your business to focus on, and should communicate your long-term view for your organisation. It should include your mission statement, your goals, and your company’s values to your staff, your financial backers, and your customers.

Mission - Your mission statement is the core of your business objectives, and the principles underlying them. It should reflect every facet of your business, as this will help to clarify what you want to achieve.

Goals - By sitting down and taking the time to choose goals that are tailored to your company, you will be on the right track to achieving those goals. They shouldn’t be generic, but rather be specific targets that you can work towards.

For example, instead of setting a goal of ‘I will turn a profit in six months’, you should set a goal of ‘I will sell 200 units of Apple headphones in six months in order to turn a profit on this product’. By being specific you keep yourself and your staff on the right track of what needs to be done to achieve that goal.

Values - Your business values should be made up of three things: The principles you personally stand for; the attitudes and beliefs that everyone in the business has in common, and the standards of behaviour that your organisation subscribes to.

There are also aspects of every business that will have an impact on the actions you need to take, and these include:

• ‍ Finance - How will you generate revenue? What are your costs likely to be? What are your profit projections? ‍
• Staff - What positions in the business are there to be filled? What policies do you need to have in place? ‍
• Marketing - How do you plan to market your new venture? Include the four P’s of marketing: Price, Product, Promotion and Place. ‍
• Operations - What systems will your business use? What will your overhead be? How will you improve efficiency? ‍
• Customers - Who are your target customers? How will they find you? How will they purchase/hire your goods/services?

Cloud based accounting practices

How do you backup your financial data? Cloud computing offers a convenient and reliable method for backing up accounting data, and the primary advantage is that the data can be retrieved using a desktop or mobile device from any location.

However, before choosing a cloud provider it is essential to make sure that it offers more than incremental backups, as historical financial reports must be retrievable ongoing.

Online ordering and payment system

How flexible is your online ordering and payment system? Many programs and mobile applications are now available to allow customers to place orders and pay online, but some are still user-unfriendly. Ensure that the ordering and payment system you choose is suited to your products/services.

BYOD policy

Do your employees prefer to use their personal mobile device to perform work-related tasks? It can provide a significant cost saving for an organisation to implement a BYOD policy, as it reduces the amount of hardware that needs to be purchased upfront by the business. If you decide to allow your employees to BYOD, does your BYOD policy ensure that company data is not mishandled? And does the policy set out what to do if a mobile device is lost or stolen?

Regulated use of mobile devices

If your employees are allowed to use either their own or company mobile devices, do you have a system in place to regulate their personal vs professional use and their device’s security? It’s important that everyone is on the same page, particularly regarding what your staff’s responsibilities are regarding software and security updates, bills and liability.

Use of cloud-based applications and tools for projects

Have you thought of using cloud-based tools for project management and project collaboration? Cloud providers supply a range of tools on a subscription basis and can be an economic choice for startups and large enterprises alike.

Integration of digital technology and apps

Can your staff members communicate and collaborate regardless of location? Can they accept orders, process payments, and enter project time and expenses using a mobile device? There is a large range of business applications available on mobile stores like the Apple store and Google Play designed to provide mobility for staff, as it enables them to access project data from any location. For example, Google recently introduced a work-related mobile for Android devices called Android for Work .

Online Chat

How do your staff members communicate between themselves and with customers? Online chat can be implemented with a service provider like Skype, which provides voice, video, and conference call facilities.

Online presence

Does your website attract a sufficient number of visitors? Search engine optimisation (SEO) ensures the visibility of a website in Search Engine Result Pages (SERP). The purpose of SEO is to make a website appear in search listings in response to a person’s search intent. The major factor is the selection of a major and some secondary keywords (search phrases), but SEO is a complex process that involves more than 50 ranking factors.

Pay-per-click (PPC) is the use of paid advertisements ( Google Adwords ) to increase visibility and bring in sales/leads from the search engine Google. PPC is an essential part of any lead generation campaign for a business, and so should be implemented by the marketing department of a company.

Do you have a presence on social media channels? Social media sites like Facebook, Twitter, LinkedIn, and Pinterest facilitate engagement with potential or existing clients. Like website content creation, social media activities should be based on a content marketing strategy that defines what type of content to post, the frequency of posting, and analytics to measure what type of content produces the best engagement with clients. Facebook ads can also be a valuable lead generation resource for business, depending on your industry and target audience.

Google for Business

Can new clients easily find the location of your business? The Google for Business program suite is particularly important for promoting a business in a local area, as people will be able to look at Google Maps to find the business location. Once entered, the business will also appear in search and on Google+. You can begin the process of adding your business to Google here .

Email marketing

Having an email marketing system in place is a great way to take advantage of any contact information you may have in your database. This is effectively free advertising and can be a good way to encourage consumer engagement. There are a number of email marketing solutions available where a company will take care of your email campaigns, such as Direct Mail and Marketing , or there are DIY solutions available such as Hilltop Mail and MailChimp .

Responsive website design/Mobile site

Is your website optimised for mobile devices? This implies what is called responsive design. Wordpress sites use a responsive theme, while HTML/CSS sites can use different techniques to make the design responsive. A responsive design means that the site displays correctly on the narrow screen of a mobile phone, as well as on the size of a PC screen. All websites today should have a responsive website design or a mobile-friendly site, as Google is now prioritising those sites with mobile-responsive features over sites that are desktop-capable only. You can find out more about this here , and you can find out if your website is mobile-friendly by Google’s standards here .

Implementation of a content strategy

Do you have a website content strategy? It should set out the planning, development, and management of your website content, as Google and other search engines now emphasise website content as a critical factor for site ranking. Articles or posts should be longer and more comprehensive than regular page content, and in addition to main keywords the content must contain theme-related words and phrases, also called semantically related terms . Such terms ensure that the content is relevant to your target audience. An example template of a business’ content strategy can be found here .

Customer Relationship Management (CRM)

Do you have an integrated customer management system? A Customer Relations system is a prime software tool for managing a company’s interactions with customers. It can automate, organise, and synchronise sales, marketing, customer service, and customer support activities. There is a range of different CRM programs available, such as Microsoft Dynamics , Salesforce , and Infusionsoft .

Cloud-based file management

Have you considered the pros and cons of cloud-based file storage? Files stored on a cloud server can be retrieved from any location using a mobile device. It provides flexibility as project staff working in different locations can collaborate, share files, and assign project tasks easily.

Online security

How secure is your computer and communications network? Security systems must be implemented that prevent the intrusion of computer viruses, malware, malicious hackers, and spam mail.

Reliable backup process

How safe is your data? A reliable backup process is an essential requirement for any business. Apart from data loss caused by equipment failure or malicious hacking, the process should also provide off-site data storage as protection from theft, fire, or natural disasters.

SSL security

A Secure Socket Layer (SSL) certificate increases website security and provides encryption of data, and is recommended for all businesses with an online presence.

Cloud computing

What hardware and software could you potentially hire from a cloud service provider? Cloud service providers supply hardware and software on a subscription basis.

Source nationally and globally

Do you operate on a worldwide basis? Digital facilities enable companies to source products or services on a worldwide basis.

Customise software

Are your software systems optimised for the tasks they perform? Strategic reviews may reveal areas where existing systems can be customised to provide improved productivity.

Digitise processes

What manual processes can potentially be automated? Manual processes should be reviewed and analysed with the intention of integrating them with online computer systems.

Automatic inventory control

Is your inventory management a manual process? Computer systems are available that can re-order products on the basis of sales volume and inventory holdings.

Online purchasing

Review and implement systems that improve online purchasing as a service for customers, and as an internal process for inventory management. A variety of mobile applications are available.

Software-as-a-Service (SaaS)

Save capital costs by paying a subscription service to software programs.

Online purchasing capability

An increasing number of Australian people now prefer to shop and pay for products and services online. As outlined in the operational section, potential systems include payment gateways and mobile applications.

Channel development

What channels can customers use to order and pay for your services? These can include the Internet, mobile applications, Facebook or online ordering applications.

Create FAQs

How do your customers find common information and problem solutions? Publish an FAQ on your website. It can save your staff a lot of time by not having to answer the same questions repeatedly.

Online support

Who and how do your customers contact your business for support? Customers today expect fast turnaround and good customer support service. Implement a live chat system or a ticket system, or alternatively, have a dedicated email for contact.

Call to Action apparent throughout the website (CTA)

There is a saying that people browsing a website will only take action if told to do so. Be clear what action you want people to take, and spell it out on every page.

Use of social media for engagement

Implement a social media strategy, and establish a presence on social media channels like Facebook, Twitter, LinkedIn and Pinterest. This will increase the engagement with your customers and potential customers have with your brand.

**This article is limited to the incorporation of a digital strategy in the appropriate segments of the business plan

If you’d like more detailed instructions on how your digital business plan needs to be filled out, this YouTube video from the Queensland Government could be of use. Based on a recording made from a June 2013 webinar, this clip is an introduction to digital strategy for small businesses, but can also be applied to larger enterprises that are moving online.

Remember, the right talent is critical to success. At Expert360 we connect the best talent with the right project.

Digital Business Plan Template

If you’d like to use our outline to create your own digital business plan template, download the PDF here.

• http://www.digitalbusiness.gov.au/getting-online/planning-your-online-activities/online-business-plan-template/
• http://www.myownbusiness.org/s2/
• http://www.entrepreneur.com/businessplan/index.html
• http://sethgodin.typepad.com/seths_blog/2010/05/the-modern-business-plan.html
• http://www.businessplanarchive.org/
• http://www.discoverbusiness.us/business-plans/
• https://www.business.qld.gov.au/business/running/technology-for-business/digital-strategy/creating
• http://websprint.me/blog/business-planning/digital-agency-business-plan-template-target-market/
• http://www.entrepreneur.com/article/224460
• http://www.plan2profit.ca/modern-business-plan/

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Gabe is part of the content marketing team at Expert360. He is a classically trained journalist, with strong interests in the future of work, the consulting industry, startups and technology.

Bank Business Plan Template

Written by Dave Lavinsky

Bank Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their banks.

If you’re unfamiliar with creating a bank business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a bank business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Bank Business Plan?

A business plan provides a snapshot of your bank as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for Your Bank Business

If you’re looking to start a bank or grow your existing bank, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your bank to improve your chances of success. Your bank business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Banks

With regards to funding, the main sources of funding for a bank are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for banks.  

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How to write a business plan for a bank.

If you want to start a bank or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your bank business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of bank you are running and the status. For example, are you a startup, do you have a bank that you would like to grow, or are you operating a chain of banks?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the bank industry.
• Discuss the type of bank you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of bank you are operating.

For example, you might specialize in one of the following types of banks:

• Commercial bank : this type of bank tends to concentrate on supporting businesses. Both large corporations and small businesses can turn to commercial banks if they need to open a checking or savings account, borrow money, obtain access to credit or transfer funds to companies in foreign markets.
• Credit union: this type of bank operates much like a traditional bank (issues loans, provides checking and savings accounts, etc.) but banks are for-profit whereas credit unions are not. Credit unions fall under the direction of their own members. They tend to serve people affiliated with a particular group, such as people living in the same area, low-income members of a community or armed service members. They also tend to charge lower fees and offer lower loan rates.
• Retail bank: retail banks can be traditional, brick-and-mortar brands that customers can access in-person, online, or through their mobile phones. They also offer general public financial products and services such as bank accounts, loans, credit cards, and insurance.
• Investment bank: this type of bank manages the trading of stocks, bonds, and other securities between companies and investors. They also advise individuals and corporations who need financial guidance, reorganize companies through mergers and acquisitions, manage investment portfolios or raise money for certain businesses and the federal government.

In addition to explaining the type of bank you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of clients served, the number of clients with positive reviews, reaching X number of clients served, etc.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the bank industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the bank industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your bank business plan:

• How big is the bank industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your bank? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your bank business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, small businesses, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of bank you operate. Clearly, corporations would respond to different marketing promotions than individuals, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other banks.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes trust accounts, investment companies, or the stock market. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of bank are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide loans and retirement savings accounts?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a bank business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of bank company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide savings accounts, auto loans, mortgage loans, or financial advice?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your bank. Document where your company is situated and mention how the site will impact your success. For example, is your bank located in a busy retail district, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your bank marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your bank, including reconciling accounts, customer service, accounting, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sign up your Xth customer, or when you hope to reach $X in revenue. It could also be when you expect to expand your bank to a new city.  

Management Team

To demonstrate your bank’s potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing banks. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a bank or successfully running a small financial advisory firm.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you see 5 clients per day, and/or offer sign up bonuses? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your bank, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a bank:

• Cost of furniture and office supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your bank location lease or a list of accounts and loans you plan to offer.  

Writing a business plan for your bank is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the bank industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful bank.  

Bank Business Plan Template FAQs

What is the easiest way to complete my bank business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your bank business plan.

How Do You Start a Bank Business?

Starting a bank business is easy with these 14 steps:

• Choose the Name for Your Bank Business
• Create Your Bank Business Plan
• Choose the Legal Structure for Your Bank Business
• Secure Startup Funding for Your Bank Business (If Needed)
• Secure a Location for Your Business
• Register Your Bank Business with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Bank Business
• Buy or Lease the Right Bank Business Equipment
• Develop Your Bank Business Marketing Materials
• Purchase and Setup the Software Needed to Run Your Bank Business
• Open for Business

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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how a Growthink business plan consultant can create your business plan for you.

Other Helpful Business Plan Articles & Templates

• Small Business

How to Run a Virtual Small Business

By Michaela Lenahan on February 13, 2024

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Working from home has grown to become the new normal, with the number of fully online businesses steadily increasing. Experts have predicted that by the year 2025, 22% of Americans will be working entirely remotely.

If your small business is completely virtual, here are some things you can do in order to keep your business running smoothly.

1. Have a good home office set up

Having a dedicated workspace will help you to feel more organized and be more productive. Invest in a reliable computer and any other high-quality tech you may need to run your business. If you plan to do video calls, make sure that you have a good webcam and a high quality mic to boost your professionalism within calls. You’ll also need a high-speed internet connection if you want to be able to work efficiently and securely.

2. Utilize online banking

You need a service that will allow you to track your finances, create invoices, pay vendors/employees, etc. With an online business bank account, you’re able to access your finances from anywhere you have access to your computer or mobile device. Grasshopper’s Innovator Business Checking also allows you to seamlessly integrate with accounting software such as QuickBooks, which can automate accounting processes.

3. Create a process for hiring and onboarding remote employees.

Since you won’t be in-person with job candidates or new workers, you’ll have to create recruiting, hiring and onboarding processes that ensure a secure and seamless transition onto your team. Conducting interviews and onboarding calls on Zoom can make for a more personal experience that allows your workers to really feel like part of the team.

4. Make sure your team is all on the same page.

When working remotely, communication is key. Since you won’t be in an office with your workers, it’s important to have reliable email, chat, video conferencing, and other communication software that can host important conversations. Software like Slack or Zoom can be helpful tools for team members to stay connected when working virtually. 

You may also want to invest in a quality project management/collaboration software that can help to organize important files and make sure everyone is properly aware of their tasks. This kind of organization can help to keep everyone on the same page and get work done more efficiently.

5. Focus on building a positive work culture

Having a positive company culture is still possible when you have a fully remote team. Make sure you’re creating a safe space that allows your team room for mistakes and questions. Connect with your employees both as a team and individually to check in and get feedback. When your team feels supported and valued within your business, more effective work can get done.

6. Set up a well-designed website

Your website can determine how the public views your business. Make sure your website is aesthetically pleasing and easy to navigate. Using cool visuals and catchy names can help to capture the attention of potential customers and generate more business. 

Other than just looking good, your website needs to function well. Half of mobile site visitors will leave a website if it takes longer than three seconds to load. Make sure each of your webpages are able to load efficiently so that you don’t lose out on potential business.

7. Stay on top of your cybersecurity

Small businesses are particularly vulnerable to cyberattacks because they fall into a hacking “sweet spot:” they are large enough to provide valuable information but often lack the security of larger organizations. To keep your business data safe, you should be using a reputable virtual private network (VPN) to encrypt your web traffic, as well as an antivirus program for all work-related devices. Additionally, you should make sure you are keeping your business finances safe by choosing a business bank account that has effective security measures in place.

8. Talk to other virtual business owners to get their insights.

There are many virtual small business owners who are in the same boat as you. Search for different networking opportunities in your area that can help you to get connected. Social media platforms like LinkedIn or X (formerly Twitter) can also be a great resource for communicating with other virtual business owners. 

Being able to connect with like-minded business owners in similar situations to your own can be a great way to share ideas and get relevant advice from people with firsthand experience. Building up your relationships with other small business owners can be a great way to build community and can even open up opportunities to further your business.

By Michaela Lenahan in Small Business

Ready to scale your business?

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Virtual Banks Forge Ahead in Defining Banking’s Digital Future

The banking landscape is undergoing a digital transformation, as traditional financial institutions (FIs) race to keep pace with evolving consumer preferences and technological advancements. 

Santander ’s recent announcement of plans to launch its digital bank,  Openbank , in the United States and Mexico in the  second half of 2024  underscores the accelerating pace of this shift. 

Moreover, this move reflects broader trends shaping the financial sector, driven by changing customer expectations, technological innovations, and shifting market dynamics. 

The proliferation of smartphones and other digital devices, for instance, has empowered users to manage their finances anytime, anywhere, leading to a growing demand for digital banking services that offer speed, enhanced security, and personalized experiences. 

For banks, embracing digital technologies brings improvements in operational efficiency, cost reduction, and access to new customer segments, not to mention the opportunity to create new revenue streams.

Michael Haney , head of product strategy at  Galileo Financial Technologies , discussed this digital shift in a recent interview with PYMNTS, highlighting three key trends: flexibility in customer-bank interactions, accessibility across multiple platforms, and the demand for personalized services tailored to individual needs.

“We are seeing an  erosion of physical accounts  into virtual ones that not only reduce the total cost of ownership for the bank, but also allow the unleashing of data and analytics that help personalize pricing, credit decision and marketing offers, and all kinds of recommendations,” Haney said.

Technologies Drive Transformation

Several key technologies, including artificial intelligence (AI) and machine learning (ML), are playing pivotal roles in driving the digital transformation of banks. 

Findings detailed in the April “Digital-First Banking Tracker® Series  Report ” reveal that nearly three-quarters of finance leaders are leveraging AI technology across various functions, including fraud detection, risk management and automation. 

Furthermore, more than 40% of banking executives see AI’s potential to streamline customer onboarding, including know-your-customer (KYC) procedures, while 25% aim to improve customer experiences with AI.

Read more:  Gen AI Turns Bank Chatbots Into Financial Advisors

Beyond personalized customer experiences, improving risk management and detecting fraud, AI and ML are being used to customize rewards and benefits based on individual customer profiles. 

“This remains a very hot space in terms of rewarding loyal customers and trying to increase customer satisfaction,” Haney said, with banks exploring innovative strategies, such as partnering with travel agencies to offer personalized services. 

Meanwhile,  blockchain-based assets  are enabling marginalized populations to overcome the identity barriers that limit their financial opportunities. This helps to fill the gaps where traditional banking systems, which often demand prerequisites such as minimum deposit sizes, credit history, and proof of address that many individuals cannot fulfill, fall short.

Keytom , a  newly launched neobank centered on digital assets, stands out as a prime example this trend. The Dubai-based company provides access to cryptocurrency transactions and investment strategies, all while actively pursuing its mission to break down financial barriers and unify both fiat and crypto domains within an accessible framework for everyone.

“At its core, the company champions financial empowerment, positioning itself as the ‘one bank for all digital assets.’ Keytom’s vision lies in dismantling financial barriers and uniting fiat and crypto domains within a cohesive framework accessible to everyone,” the virtual bank said in a Tuesday (April 9) press release.

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Hong Kong virtual banks seeking growth in lending to small businesses

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• 27 Jun, 2022
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• Theme Healthcare & Pharmaceuticals Real Estate Technology, Media & Telecom Banking Fintech Insurance

Lending to small businesses, long underserved by traditional banks, is set to be a new growth engine for virtual banks in Hong Kong due to technology-enabled credit risk profiling and lower servicing cost.

The eight digital lenders in Hong Kong are leveraging a slew of technologies, such as big data and AI, to help build credit profiles for their customers, said Benjamin Quinlan, CEO of Quinlan & Associates, a Hong Kong-based consulting firm. By using alternative data, such as what time the application is submitted, virtual banks could potentially develop better credit assessments compared with their traditional counterparts.

"A consequence of this is the richer data that these virtual banks are able to process when arriving at a credit decision," Quinlan said. "As such, while these [small and medium-sized enterprises] may appear riskier than traditional banks lacking granular insight, the virtual banks' data advantage can help fulfill these underserved or unserved SMEs, while mitigating the risk of incurring bad debt."

Livi Bank Ltd. has plans to expand into lending to SMEs after Ping An OneConnect Bank (Hong Kong) Ltd., Ant Bank (Hong Kong) Ltd., ZA Bank Ltd. and Airstar Bank Ltd. entered the HK$100 billion market over the last two years.

Ping An OneConnect Bank (Hong Kong), also known as PAOB and backed by Ping An Insurance (Group) Co. of China Ltd., has been leading the race. It held a market share of about 25% in terms of loans issued under two government-guarantee programs for SMEs between July 2021 and December 2021. Loans approved under the two programs totaled HK$103.1 billion as of the end of 2021, according to Hong Kong government data. The lender secured its virtual bank license in May 2019.

Virtual banks in Hong Kong began their operations two years ago, starting with the retail space, and have since expanded to wealth management and the SME sector to gain a leg up in profitability. In 2021, all banks reported a greater loss before tax compared with 2020, according to a June 15 KPMG report. Their net losses ranged between HK$214 million and HK$687 million in the 12 months ended Dec. 31, 2021.

Digital lenders can unlock HK$18 billion in revenues by 2025 by capturing a customer base of about 44,000 SMEs in Hong Kong, Quinlan & Associates estimated in a November 2021 report. There are currently more than 340,000 SMEs in Hong Kong, according to government estimates. The biggest sectoral contributors would be SMEs in the import-export and retail, especially e-commerce companies, Quinlan said.

Managing risk

Despite having less capital than incumbent banks, virtual banks usually begin their forays into the SME business conservatively, such as offering fee-based services instead of unsecured loans, analysts said.

"On the face of it, [virtual banks] have a slightly higher risk profile: new customers without a track record or credit history, entirely remote channels which present risks of potential financial crime and fraud, inherently higher exposure to cybersecurity risks and other resilience events around service disruption," said David Scott, Hong Kong banking and capital markets leader at EY.

As part of efforts to mitigate risk, PAOB uses an alternative credit-scoring model that reduces the bank's risk exposure during the loan assessment process, a spokesperson for the bank told S&P Global Market Intelligence. Upon receiving consent from an SME, PAOB can access data related to the SME's export-import activities and is not constrained by how often the company maintains its management accounts or submits its latest financial information, the spokesperson added.

At livi, the lender utilizes RegTech, data analytics and innovative technology to manage associated risks, said Peter Yim, head of SME at the bank . The bank supports its credit and onboarding decisions using a unique liquidity projection model and a simplified credit risk assessment model that enables it to offer financing swiftly.

In addition, some banks have turned to partnership synergies to lend more efficiently, which affected what types of SMEs they lend to, Quinlan said. PAOB, for example, has a partnership with trade-related processing firm Tradelink Electronic Commerce Ltd. to extend preapproved loans as much as HK$5 million to SMEs that are already a part of the Tradelink network, which are predominantly export-import-oriented.

Livi, on the other hand, is rolling out franchise financing solutions for entrepreneurs in partnership with convenience store chain 7-Eleven, which is operated by major livi shareholder Jardine Matheson Ltd. The company plans to make more tailor-made financial products for SMEs available via Jardine's business network, said Yim.

"All lending inevitably poses a certain level of risk to a bank's risk profile," Yim added. "The important thing is to have stringent measures in place to manage the associated risks."

Virtual banks have opportunities to get ahead of traditional banks in Hong Kong due to newer technological capabilities that are not bogged down by legacy infrastructure issues, EY's Scott said. It is too early to see trends in bad loans just yet, but so far these digital lenders have attracted SME clients in the services industry, Scott added.

"We have a very prudent approach to risk management and always try our best to strike a balance between business development and risk management," said Devon Sin, ZA Bank's alternate chief executive. ZA Bank's SME loan portfolio had increased twenty-fold year over year as of June, having launched its SME business in 2021.

Cost and profits

A quarter of SMEs in Hong Kong perceive that it has been more difficult to gain credit approval from banks compared with six months prior, according to a first-quarter government survey published May 3.

"SMEs have always been a challenge for traditional banks to service cost effectively," said Zennon Kapron, director of financial technology research and consulting firm Kapronasia. "Due to typically thin credit files and a lack of physical assets, it becomes difficult for banks to accurately assess and price that risk."

PAOB said, as of the end of 2021, 26% of its SME borrowers had never obtained a loan from other banks. Among those that had secured bank loans before, 75% had never received an unsecured loan from a bank, it added.

"The profitability challenge for virtual banks will lie around whether they are able to acquire SMEs at a low enough customer acquisition cost, then manage the ongoing costs of servicing them, and hold on to them to generate significant customer life value over the period of their relationship to ultimately contribute positively to the bottom line," Quinlan said.

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Virtual Bank Business Plan

Virtual bank business plan presentation, free google slides theme and powerpoint template.

Nowadays we do practically everything online, and more and more services of this type are in demand, since they allow us to carry out procedures from the comfort of our home, so if you are thinking of creating a business plan for an online bank, we have the perfect proposal for you. Its white background leaves the protagonism to what is really important: the information you want to convey. At the same time, the illustrations simulate a browser tab, and add an informal but professional tone.

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The Complete Guide To Virtual Bank Business Financing And Raising Capital

By henry sheykin, resources on virtual bank.

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Introduction

In today's rapidly evolving digital landscape, virtual banks have emerged as a innovative solution for financial services, offering convenience, accessibility, and cost-effectiveness. With the exponential rise in digital transactions and banking activities, the virtual bank industry has witnessed remarkable growth in recent years.

According to the latest statistical data, the virtual bank industry is projected to experience a staggering compound annual growth rate (CAGR) of XX% over the next five years. This remarkable growth is fueled by the increasing demand for seamless online banking experiences, the rising popularity of mobile banking applications, and a growing consumer preference for personalized financial solutions.

In this comprehensive guide, we delve into the intricacies of virtual bank business financing and raising capital. We explore the various funding options available to virtual banks, discussing their potential advantages and challenges. Moreover, we decipher the strategies virtual banks can employ to attract investors and secure the necessary capital to expand their operations.

Whether you are an aspiring virtual bank entrepreneur or a financial enthusiast looking to gain insights into this thriving industry, this guide will equip you with the knowledge and tools necessary to navigate the landscape of virtual bank business financing and capital raising.

Understanding the Virtual Bank business model

The Virtual Bank business model is a unique and innovative approach to banking that relies primarily on technology to deliver financial services. This model allows virtual banks to operate without the need for physical branches, resulting in lower operating costs and greater convenience for customers.

When it comes to Virtual bank financing and raising capital for virtual banks , it is essential to understand the different business financing options available. One of the main challenges for virtual banks is securing enough capital to fund their operations and growth. Therefore, understanding the virtual bank capital raising strategies and capital sources for virtual bank businesses becomes crucial.

Raising capital for virtual banks can be achieved through various methods, including:

• Equity financing: Virtual banks can raise capital by issuing equity shares to investors.
• Debt financing: Virtual banks can obtain financing by borrowing money from financial institutions.
• Venture capital: Virtual banks can seek funding from venture capital firms that specialize in the fintech industry.

Virtual bank funding opportunities are not limited to traditional methods. Crowdfunding and strategic partnerships with established financial institutions can also provide access to financing and capital for virtual banks .

However, securing financing for virtual banks can be challenging. Therefore, it is essential to have a well-thought-out guide to securing financing for virtual banks . This guide should include:

• A comprehensive business plan that outlines the virtual bank's unique value proposition and growth potential.
• A detailed financial forecast that demonstrates the virtual bank's ability to generate revenue and repay investors or lenders.
• A strong management team with relevant experience in the fintech industry.

Additionally, virtual banks should consider these tips and tricks to improve their chances of securing financing:

• Building relationships with potential investors or lenders through networking events and industry conferences.
• Presenting a compelling pitch that clearly communicates the virtual bank's competitive advantage and growth strategy.
• Seeking guidance from financial advisors or consultants with expertise in virtual bank financing.

In conclusion, understanding the virtual bank business model and the various financing options available is essential for virtual banks looking to raise capital. By following a comprehensive guide and implementing effective capital raising strategies, virtual banks can increase their chances of securing funding and fueling their growth.

Importance of having a well-defined business plan

When it comes to virtual bank financing and raising capital, having a well-defined business plan is of utmost importance. A business plan serves as a road map for your virtual bank, outlining the goals and strategies that will lead to success. It provides a clear direction and helps attract potential investors and lenders.

A well-defined business plan is crucial for virtual banks seeking to raise capital and secure financing. It demonstrates that you have a clear vision for your virtual bank and have thoroughly considered the market, competition, and potential risks. It also showcases your understanding of the industry and your ability to execute your plans effectively.

Having a well-defined business plan not only helps you present a compelling case to potential investors and lenders but also helps you evaluate the feasibility and profitability of your virtual bank. It enables you to identify any gaps or weaknesses in your strategy and make necessary adjustments.

Here are some key reasons why a well-defined business plan is essential for virtual banks:

• Attracting investors: A well-prepared business plan is crucial for attracting investors. It provides them with a comprehensive understanding of your virtual bank's potential for growth and profitability. Investors want to see a solid business plan that demonstrates a clear path to success.
• Evaluating financial needs: A business plan helps you determine the exact amount of financing or capital you need for your virtual bank. It enables you to project your financial needs accurately and identify potential sources of funding.
• Set goals and strategies: A business plan allows you to set specific goals and strategies for your virtual bank. It helps you outline the steps you need to take to achieve these goals and identify the resources required.
• Manage risks: A well-defined business plan helps you identify potential risks and challenges that may arise in the virtual banking industry. It allows you to develop contingency plans and strategies to mitigate these risks effectively.
• Track progress: A business plan serves as a benchmark to track the progress of your virtual bank. It helps you monitor key performance indicators and evaluate whether you are moving in the right direction.

Here are some tips and tricks for creating a well-defined business plan for your virtual bank:

• Conduct thorough market research to understand the virtual banking industry, target audience, and competition.
• Define your unique value proposition and positioning in the market.
• Outline your marketing and sales strategies to attract and retain customers.
• Prepare detailed financial projections, including revenue forecasts and expense budgets.
• Identify potential sources of financing and develop a comprehensive funding strategy.
• Continuously update and refine your business plan as your virtual bank evolves.

A well-defined business plan is an invaluable tool for virtual banks looking to secure financing and raise capital. It not only helps you attract investors and lenders but also guides your business strategy and enables you to navigate the challenges of the virtual banking industry effectively.

Exploring traditional methods of raising capital

When it comes to virtual banks, securing financing and raising capital is a crucial aspect of their success and growth. As a virtual bank, you need to explore various traditional methods of raising capital to ensure the financial stability and sustainability of your business.

One of the financing options for virtual banks is to approach traditional banks and financial institutions for loans or lines of credit. These institutions have experience in working with financial institutions and may be more willing to provide funding.

Virtual bank financing can also be obtained through private investors or venture capitalists who are interested in supporting innovative banking solutions. These individuals or groups can provide the necessary capital in exchange for equity or a share of your virtual bank's profits.

Another way to secure financing is to consider virtual bank capital raising strategies such as crowdfunding. Crowdfunding platforms allow you to gather funds from a large number of individuals who are interested in supporting your virtual bank's mission.

Capital sources for virtual bank businesses also include government grants and subsidies. Researching and applying for such funding opportunities can provide the necessary financial boost to your virtual bank.

To increase your chances of securing financing, it is important to have a solid business plan, financial projections, and a clear understanding of your target market. Additionally, establishing a strong network within the banking industry and showcasing your expertise can help attract potential investors.

• Develop a comprehensive business plan that outlines your virtual bank's unique value proposition and growth potential.
• Utilize your existing network and industry connections to find potential investors who may be interested in supporting your virtual bank.
• Research and apply for government grants and subsidies that are specifically tailored to virtual bank businesses.
• Consider reaching out to venture capitalists and angel investors who specialize in the fintech and banking sectors.
• Use online crowdfunding platforms to pitch your virtual bank to a wider audience and gather funds from individual supporters.

By exploring these virtual bank funding opportunities and implementing effective capital raising strategies, you can secure the necessary financing for your virtual bank's growth and success.

Remember, raising capital for virtual banks requires perseverance, a strong business case, and a clear vision for the future. With the right approach and determination, you can find the funding you need to thrive in the competitive world of virtual banking.

Exploring alternative methods of raising capital

In the fast-paced world of virtual bank financing, raising capital for virtual banks is a critical aspect of success. As virtual banks continue to gain popularity, business financing for virtual banks has become increasingly important to meet the growing demand for digital financial services.

While traditional methods of raising capital, such as bank loans and venture capital, have been widely used, virtual banks also have access to a range of alternative financing options. These alternative methods offer new and innovative ways for virtual banks to secure the necessary funding to grow and expand their operations.

Virtual bank capital raising strategies are diverse and varied. Some of the most popular options include crowdfunding, peer-to-peer lending, and strategic partnerships. Each of these avenues provides distinct advantages and challenges, making it crucial for virtual bank businesses to carefully consider their financing options.

Guide to securing financing for virtual banks:

• Crowdfunding: Crowdfunding platforms allow virtual banks to raise capital by reaching out to a large number of individual investors. By showcasing their innovative digital banking solutions, virtual banks have the opportunity to generate interest and secure financial contributions from a wide range of backers.
• Peer-to-peer lending: Peer-to-peer lending platforms enable virtual banks to borrow money directly from individuals without the need for traditional intermediaries. This form of financing can offer more flexible terms and lower interest rates, allowing virtual banks to access the capital they need while minimizing costs.
• Strategic partnerships: Collaborating with other companies, whether they are established financial institutions or technology-based startups, can provide virtual banks with access to additional capital and resources. By leveraging the strengths and expertise of their partners, virtual banks can expand their offerings and enhance their competitive advantage.

It is important for virtual bank businesses to thoroughly research and analyze the various financing options available to them. By considering the specific needs and goals of their organization, virtual banks can identify the most suitable capital sources for their unique circumstances. Being strategic in their approach to funding can greatly increase the chances of success and sustainability in the competitive virtual banking industry.

With a myriad of virtual bank funding opportunities out there, it's crucial for virtual bankers to navigate the landscape with a well-structured capital raising plan. By diversifying their financing sources and exploring innovative methods, virtual banks can position themselves for growth and success in the ever-evolving digital financial services sector.

Crowdfunding as a Viable Option for Financing

Virtual bank businesses often face challenges when it comes to securing financing and raising capital. Fortunately, one option that is gaining popularity is crowdfunding. This method allows virtual banks to raise funds from a diverse group of investors who are interested in supporting innovative financial ventures.

Virtual bank financing can be a complex and competitive process, but crowdfunding offers a unique opportunity to connect with potential investors on a more personal level. By utilizing online platforms, virtual banks can present their business plans and showcase their value propositions to a vast audience. This enables them to tap into a broader pool of capital sources that may not have been accessible through traditional financing channels.

One of the advantages of crowdfunding is that it allows virtual banks to leverage their digital presence and engage with their customers. By promoting their crowdfunding campaign through social media channels, virtual banks can generate buzz and attract a network of supporters who believe in their mission and vision. This not only helps raise capital but also fosters a sense of community and loyalty among customers.

When considering crowdfunding as a financing option, virtual banks should keep in mind some important tips and tricks:

• Clearly articulate the value proposition: Virtual banks need to clearly communicate the unique benefits they offer to investors. This includes highlighting their innovative technologies, competitive advantages, and potential for growth.
• Create compelling marketing materials: Eye-catching visuals, well-crafted videos, and informative content can go a long way in capturing the attention of potential investors. Virtual banks should invest in creating high-quality marketing materials that effectively convey their value proposition.
• Engage with the crowdfunding community: Active participation in the crowdfunding community can enhance visibility and credibility. Virtual banks should interact with potential investors, address their concerns, and regularly update them on the progress of their campaign.
• Offer attractive rewards: To incentivize investors, virtual banks can offer rewards such as early access to new features, discounts on services, or exclusive merchandise. These incentives not only encourage participation but also demonstrate appreciation for the support received.

In conclusion, crowdfunding presents a viable option for virtual banks to secure financing and raise capital. By leveraging their digital presence, engaging with potential investors, and effectively communicating their value proposition, virtual banks can tap into a diverse pool of capital sources. With careful planning and execution, crowdfunding can provide the necessary funds for virtual banks to grow and thrive in the competitive banking industry.

Venture Capital Investments as a Source of Capital

When it comes to virtual bank financing, venture capital investments can be an excellent source of capital. Virtual banks, like any other business, require funds to operate and grow. Raising capital for virtual banks can be challenging, but venture capital presents a valuable opportunity.

Venture capital firms specialize in providing capital to startups and early-stage companies with high growth potential. Their investment not only includes financial support but also strategic guidance and industry connections.

The capital raising guide for virtual banks emphasizes the importance of exploring financing options, and venture capital should definitely be on the list. Virtual bank capital raising strategies often involve attracting investors who believe in the potential and scalability of the business model.

Securing financing for virtual banks can be a complex process, and having the right capital sources is crucial. Venture capital firms are actively seeking innovative technology-driven ventures, making it an ideal funding opportunity for virtual banks.

Tips and Tricks for Navigating Venture Capital Investments:

• Do Your Research: Before approaching venture capital firms, thoroughly understand their investment criteria and areas of focus.
• Prepare a Compelling Pitch: Clearly articulate the unique value proposition of your virtual bank and how it differentiates itself from the competition.
• Build Relationships: Networking is essential in the world of venture capital. Attend industry events, establish connections, and leverage your network to get introductions to potential investors.
• Highlight Growth Potential: Showcase the scalability and market opportunity of your virtual bank. Investors are looking for ventures with high growth potential.
• Understand the Terms: Venture capital investments typically come with certain terms and conditions. Ensure you fully comprehend the implications and consequences of these terms.

Venture capital investments offer a significant opportunity for virtual banks to secure the necessary funding to fuel their growth. By understanding the capital sources available and following effective strategies, virtual bank businesses can navigate the financing landscape and attract the right investors.

The potential of angel investors in funding Virtual Bank business

When it comes to virtual bank financing and raising capital for virtual banks , one potential source of funding that should not be overlooked is angel investors. These individuals or groups of investors have the financial resources and expertise to provide the necessary funds to launch or expand a virtual bank business.

Business financing for virtual banks can be a challenge, especially given the unique nature of this industry. Traditional banks and financial institutions may be hesitant to provide funding due to the lack of physical branches and the increasing competition from virtual banks. This is where angel investors can play a crucial role.

Angel investors are typically high-net-worth individuals who are willing to invest their personal funds in startups and early-stage businesses. They are often attracted to innovative and disruptive business models, making virtual banks an attractive option for investment. These investors not only provide the necessary capital but also bring their industry knowledge, experience, and network to the table.

As a capital raising guide for virtual banks , angel investors offer several advantages. Firstly, they have a higher risk appetite compared to traditional lenders and are more willing to take a chance on an emerging industry like virtual banks. Secondly, their investment can be a validation of the business model, which can further attract other potential investors and partners.

Some financing options for virtual banks include pitching to angel investor networks, attending industry conferences and networking events, and utilizing online platforms that connect entrepreneurs with potential investors. Additionally, having a well-crafted business plan and a strong value proposition to offer to investors is essential.

• Build a strong network: Attend industry conferences and networking events to connect with potential angel investors who are interested in the fintech and virtual banking sector.
• Create a compelling business plan: Clearly outline your virtual bank's value proposition, market potential, and growth plans to attract investors.
• Showcase industry expertise: Highlight your team's knowledge and experience in the virtual banking industry to instill confidence in potential angel investors.
• Utilize online platforms: Leverage online platforms specifically designed to connect startups with angel investors to increase your chances of securing funding.

Overall, angel investors can provide valuable virtual bank funding opportunities for entrepreneurs looking to start or grow their virtual bank businesses. Their financial resources, industry expertise, and network can help propel a virtual bank to success. It is crucial to thoroughly research and approach potential angel investors who align with your business vision and can contribute more than just capital.

Strategic partnerships and collaborations for fundraising

Raising capital for virtual banks can be a challenging task, as traditional funding options may not always be readily available. However, strategic partnerships and collaborations can offer excellent opportunities for virtual bank businesses to secure the necessary financing. By forming alliances with other businesses, virtual banks can leverage their networks, resources, and expertise to attract funding from various capital sources.

Virtual bank capital raising strategies often involve identifying potential partners who share similar goals and values. These partnerships can take different forms, such as joint ventures, strategic alliances, or even equity investments. For instance, a virtual bank might collaborate with a technology company to develop innovative banking solutions, attracting the attention and investment of venture capitalists.

Another financing option for virtual banks is to partner with established financial institutions. By aligning themselves with reputable banks or credit unions, virtual banks can tap into their expertise in compliance, risk management, and customer acquisition. These partnerships not only add credibility to the virtual bank but also provide access to the larger customer base of the partnering institution, which can be instrumental in attracting investors and funders.

Virtual banks can also explore collaborations with fintech startups or established payment processors. These partnerships can help virtual banks enhance their product offerings, streamline operations, and expand their market reach. Additionally, fintech startups and payment processors often have their own network of investors and funding sources, which can open up new funding opportunities for virtual banks.

To effectively secure financing through strategic partnerships and collaborations, virtual banks should keep the following tips and tricks in mind:

• Identify complementary partners: Look for businesses that can complement the virtual bank's offerings and bring additional value to potential investors.
• Build mutually beneficial relationships: Prioritize building strong relationships with potential partners, emphasizing the shared benefits and long-term value of the collaboration.
• Showcase unique value proposition: Highlight the unique advantages and innovations of the virtual bank to attract partners who are aligned with the bank's vision and goals.
• Tap into existing networks: Leverage the networks of potential partners to gain access to investors, industry influencers, and funding sources.
• Establish clear objectives and agreements: Clearly define the objectives, roles, and responsibilities of each partner to ensure a mutually beneficial collaboration and minimize potential conflicts.
• Continually nurture and expand partnerships: Regularly communicate and collaborate with partners to strengthen relationships and explore new opportunities for funding and growth.

Strategic partnerships and collaborations can be powerful tools for virtual banks seeking financing and capital. By leveraging the resources, expertise, and networks of partners, virtual banks can enhance their credibility, attract investors, and secure the necessary funding to fuel their growth and innovation.

The Significance of Government Grants and Funding Programs

When it comes to virtual bank financing and raising capital for virtual banks, one significant avenue to explore is government grants and funding programs. These initiatives can provide a much-needed financial boost for virtual banks, enabling them to expand their operations, invest in technology, and meet regulatory requirements.

Government grants and funding programs offer virtual banks various financing options and capital sources that are specifically tailored to their needs. These programs often have specific criteria and eligibility requirements, but they can be an excellent opportunity for virtual banks to secure funding and propel their growth.

One of the advantages of government grants and funding programs is that they provide funding opportunities that virtual bank businesses may not find elsewhere. These programs understand the unique challenges and opportunities faced by virtual banks and offer support to overcome them.

Securing financing for virtual banks can be a complex process, and having a guide to navigate the capital raising journey is crucial. Government grants and funding programs can serve as such a guide, providing valuable resources and assistance to virtual banks seeking funding.

By taking advantage of government grants and funding programs, virtual banks can access financial resources that can be instrumental in their growth and success. These funds can be used for a range of purposes, including infrastructure development, research and development, marketing initiatives, and talent acquisition.

To make the most of government grants and funding programs, virtual banks should keep in mind some essential tips and tricks:

• Thoroughly research available grants and funding programs to identify the ones that align with your virtual bank's mission and goals.
• Ensure that you meet all the eligibility criteria before applying for a grant or funding opportunity.
• Prepare a comprehensive business plan and financial projections to demonstrate the potential of your virtual bank.
• Seek professional advice and guidance to navigate the application process and increase your chances of securing funding.
• Stay informed about updates and changes to government grants and funding programs, as new opportunities may arise.

In conclusion, government grants and funding programs are a significant source of financing and capital for virtual banks. These initiatives provide valuable opportunities for virtual banks to secure funding, expand their operations, and achieve their business objectives. By leveraging these programs and following the right strategies, virtual banks can position themselves for long-term success in the competitive banking industry.

Virtual banks have revolutionized the financial services industry, offering a range of benefits to both consumers and entrepreneurs. In this guide, we have explored the various avenues of virtual bank business financing and capital raising, highlighting the importance of a well-defined business plan and exploring both traditional and alternative methods of raising capital.

From crowdfunding to venture capital investments, angel investors to strategic partnerships, and government grants to funding programs, virtual banks have a multitude of options when it comes to securing the necessary capital for expansion. It is crucial for virtual bank entrepreneurs to thoroughly research and understand these options to make informed decisions that align with their business goals.

As the virtual bank industry continues to grow and evolve, access to capital will play a vital role in determining the success and sustainability of virtual banks. By leveraging the strategies and knowledge outlined in this guide, virtual bank entrepreneurs can position themselves for growth and navigate the intricacies of raising capital effectively.

Aspiring virtual bank entrepreneurs and financial enthusiasts alike can use this guide as a valuable resource to gain insights into the world of virtual bank business financing and capital raising. By understanding the intricacies of these processes, individuals can make informed decisions and seize opportunities in this dynamic industry.

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How To Open a Business Bank Account Online (2024 Guide)

Erin Quinn is a freelance writer and editor with a background in education, marketing, and non-profit administration. Erin’s first passion is communication and making difficult topics easy to understand. She loves to “nerd out” on personal finance topics and break all the cultural rules about discussing money.

When she isn’t copywriting, she is both working and volunteering in local non-profits to benefit school kids of all ages. As a military spouse, Erin loves getting to know whatever locale her family is in, especially if food is involved!

David Gregory is a sharp-eyed content editor with more than a decade of experience in the financial services industry. Before that, he worked as a child and family therapist until his love of adventure caused him to quit his job, give away everything he owned and head off to Asia. David spent years working and traveling through numerous countries before returning home with his wife and two kids in tow. His love of reading led him to seek out training at UC San Diego to become an editor, and he has been working as an editor ever since. When he’s not working, he’s either reading a book, riding his bicycle or playing a board game with his kids (and sometimes with his wife).

You can set up a business bank account completely online with a few simple steps.

Key Takeaways

• A business bank account is an ideal way to separate your business and personal finances.
• Business bank accounts can be set up entirely online.
• Consider your business’s needs and research fees and features of each financial institution before beginning the application process.
• Before you begin, gather the necessary documents in electronic format to facilitate a smooth and efficient process. 

Whether you are a small business owner just starting, an individual contractor or a large corporation, business bank accounts can help meet your unique needs. These accounts offer several benefits such as separating business and personal finances, streamlining accounting, managing risk for personal liability and assisting with regulatory compliance. 

Opening a business account online is a simple process if you are prepared with the necessary documents and information.

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Why You Can Trust The MarketWatch Guides Team

Personal banking is a big financial decision, especially with the number of product options and rates available in the market. To help you make the best choices possible, we at the MarketWatch Guides team are dedicated to providing you with a comprehensive view of the best banks, credit unions and financial technology products available in the United States. Our team researched more than 100 of the country’s largest and most prominent financial institutions, collecting information on each provider’s account options, fees, rates and terms.

Learn more about our methodology and editorial guidelines .

Opening a Business Bank Account Online

Use this step-by-step guide to understand the process of opening a business account online. 

Step 1: Research Online Banks and Compare Account Options

Start by researching accounts at various financial institutions to find one that suits your business needs. Just as there are personal accounts, there are business checking accounts and business savings accounts. 

Consider account fees , transaction limits, wire transfer fees, online banking features and customer support. Some accounts may offer interest on your balance, so look at the annual percent yield (APY) if the account has one.

Also, you should make sure the bank is a member of the FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration) so your money will be insured and safe. 

Step 2: Prepare Required Documents and Information

You’ll need the following documents for your online business bank account application: 

• Business registration documents : These may include your articles of incorporation, business license or certificate of formation.
• Employer Identification Number (EIN) or Social Security number (SSN) : You need an EIN or SSN to identify your business for tax purposes. If your business has employees or multiple owners, you will need an EIN. If you’re a sole proprietor, you can use your SSN.
• Personal Identification Documents (ID) : Anyone with access to your accounts, such as owners, partners and authorized signers, should be prepared to provide a government-issued ID such as a driver’s license or passport.
• Proof of business address : You will need a document that confirms the physical location of your business. If the business operates from a home address, check with the bank about its home-based business policies.
• Business license or permits : Not every business requires a license or permit, but if your industry is regulated by a licensing or permitting board, be sure to have proof of your authorization. 

To ensure a smooth application process, create a checklist of the required documents specific to your chosen bank’s application.

Step 3: Initiate the Application Process

Go to the website of the bank you’ve chosen. Look for the option to “Apply Now” or “Open an Account” under the Business Accounts section, and click on it to begin the application process. 

Be sure to complete the online application with accurate information. You’ll likely need to provide details about your business such as its legal name, address, type of business, industry and anticipated account activity. 

Step 4: Provide Necessary Business and Personal Information

Scan or take clear photos of the necessary documents and upload them as instructed. Make sure the documents meet the bank’s requirements for format and file size.

Step 5: Review and Submit Your Application

After reviewing and agreeing to the bank’s terms, submit your application electronically. Some banks may require a small opening deposit. The bank will review your application, and it may contact you for additional information or verification if needed. 

Step 6: Set Up Your Account and Start Banking

Upon approval, you’ll receive confirmation of your new business account. The bank will provide instructions for setting up online banking access, ordering checks and downloading the mobile app. If your account comes with a business debit card or credit card, you’ll receive them in the mail — follow the instructions provided to activate them.

Once your account is set up, you can start using it to receive payments, make purchases, pay bills and manage your business finances.

Benefits of a Business Banking Account

While it may not seem necessary to open a business bank account, especially if you are a single proprietor or a small business owner, there are good reasons to do so.

• Protect yourself: In the case of a lawsuit, it is best to have your personal assets separate and therefore protected.
• Simplify taxes: If all of your business expenses and dealings are in one easy-to-find place, it makes the process much smoother when dealing with the Internal Revenue Service.
• Build credit: In the long term, having a business checking account is the first step toward building credit as a business. That can be beneficial down the line if you need to take out a small business loan or want a business credit card.

Tips for Selecting the Right Online Bank

When selecting an online bank for your business, consider the following factors:

• Account fees and limitations: Your business checking account may have a minimum balance requirement, monthly maintenance fee, transaction fees, overdraft fees or ATM fees. You may also see transaction limits that cap the number of withdrawals and deposits you can make within a period.
• Account features and perks: Does it offer a mobile banking app with account alerts, customizable reporting tools and security measures like multi-factor authentication? Can you set up bill pay or ACH transfers to automate some of your cash flow? 
• Integrations with your business tools: Check if you can integrate the account with the software you use for payment processing, payroll and accounting.
• Physical location or ATM capability: If you receive cash payments, you may also want to check that it’s convenient to make cash deposits. 
• Business lending solutions: If you think you may expand or need credit in the future, consider whether the online bank offers business loans, lines of credit or business credit cards. Evaluate the terms, interest rates, loan amounts and eligibility criteria for those credit products.
• Regulatory compliance record and financial stability: You should check the reputation of your chosen bank by reading reviews. You should also verify that the bank is insured by the Federal Deposit Insurance Corporation (FDIC).
• Customer support: Look for reviews or testimonials from other business customers to gauge the bank’s responsiveness and reliability in addressing customer inquiries or issues. Check what support channels it offers and if they meet your needs.

Common Pitfalls to Avoid

When completing an online application for a business bank account, avoid these common mistakes that could lead to delays or complications.

• Incomplete or inaccurate information: Ensure you have all the information needed to begin the application, both personal and for the business. Double-check spellings, addresses and numerical data to avoid errors that could lead to application rejection or processing delays.
• Ignoring eligibility: Learn the bank’s requirements, including business type, ownership structure, industry restrictions and minimum balance requirements. Double-check you meet these criteria before proceeding with the application.
• Skipping the review process: Take time to review all the information before applying. Verify that you’ve uploaded all the documents correctly and that you’ve filled out all the fields in the application form.

If you encounter roadblocks during the online application process, reach out to the bank’s customer support team for assistance. After applying, follow up with the bank to confirm receipt and inquire about the status of your application. Stay proactive in addressing any outstanding requirements or issues that arise during the processing period. 

The Bottom Line: Opening a Business Bank Account Online

Opening an account for your business allows you to separate your personal and business finances and conduct important business transactions swiftly and accurately. 

The process begins with thorough research and comparison of online banks to find the one that best suits your needs. You’ll want to consider account fees, transaction limits, customer service and online banking features.

FAQ: How To Open a Business Bank Account Online

Can i open a business bank account online if i have a sole proprietorship.

Yes, you’ll typically use your Social Security Number (SSN) as the taxpayer identification number for your business unless you’ve obtained an Employer Identification Number (EIN) from the IRS.

How long does it take to open a business bank account online?

The time it takes can vary depending on several factors, including the specific bank’s processes, the completeness and accuracy of the application and any additional verification requirements. In general, the timeline for opening a business bank account online typically ranges from a few days to a couple of weeks.

Can I open a business bank account online if my business is not yet registered?

In most cases, you will need to have your business registered before you can open a business bank account, whether you’re applying online or in person. Business registration provides the necessary legal documentation to establish the existence of your business, which banks typically require when opening a business account. An exception may be if you are operating as a sole proprietor.

Editor’s Note: Before making significant financial decisions, consider reviewing your options with someone you trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.

How to Start an Online Bank

Starting an online bank can be a profitable venture for entrepreneurs. There are several things to consider when starting an online bank, from the technology you’ll need to the banking regulations you’ll need to comply with. 

Here are eight steps to start building an online bank business.

Eight Steps to Launching a New Online Bank Business

1. name your online bank business.

Give your online bank business an identity so people will consider it a well-known and respected brand. You can take the name of your online bank business from your industry, focus on a geographical location, or use your name, among other options.

The main goal of naming your online bank business is to make it sound appealing and trustworthy so customers will want to do business with you.

2. Choose a Legal Form for Your Business

By incorporating your online bank business, you will limit your liability. You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp). Or you can operate as a sole proprietorship.

The business structure you choose for your online bank business will determine the amount of taxes you pay and which state or federal tax forms you need to file.

Read our article comparing the most common online bank business structures .

3. Write an Online Bank Business Plan

All online bank business owners should develop a business plan. 

A business plan is a document that outlines the goals, strategies, and operations of a business. It can be used to secure funding from investors or lenders, as well as to guide the day-to-day operations of the business. The business plan should include the company’s products or services, market analysis, financial projections, and management team.

When developing your online bank business plan and strategy, you should think about the following questions your customers might have:

• What is an online bank?
• What services does an online bank offer?
• How do I open an account with an online bank?
• Can I deposit cash into my account with an online bank?
• Can I withdraw cash from my account with an online bank?
• Are there any fees associated with an online bank account?
• How do I transfer money between accounts with an online bank?
• Can I set up direct deposit with an online bank?
• What is the interest rate on an online bank account?
• What are the benefits of using an online bank?
• What are the risks of using an online bank?
• What happens if I forget my password for my online bank account?
• Can I cancel my online bank account?
• How do I contact customer service for an online bank?
• What is the difference between an online bank and a traditional bank?

Answering these questions will give you a good foundation for developing your business plan.

Read our article about how to write an online bank business plan .

4. Apply for the Necessary Permits and Licenses

You may need to obtain required licenses and permits before launching your online bank business.

For example, if you engage in any money transmitting activities, you will need to obtain a money transmitter license from the Financial Crimes Enforcement Network (FinCEN).

You must also register your online bank business as a legal entity with the state where you plan to do business. You can simply file an online form through your Secretary of State website.

Registering with the federal government is also essential so you can properly pay taxes for your business. You will also need an Employer Identification Number (EIN), which you can apply for at the IRS website, if you plan to hire employees.

Read our article about obtaining the proper online bank business licenses .

5. Determine Your Budget & Apply for Funding as Needed

In developing your online bank business plan, you will figure out how much funding you need to start and grow your business.

If you have funds to invest in your online bank business, you may consider taking advantage of that. In addition to your personal funds, other forms of potential funding for your online bank business include traditional bank loans, SBA loans, credit cards, angel investors, and family and friends.

Read our article about the costs associated with starting an online bank business to help you determine if funding is needed. 

6. Get the Technology & Software Needed to Run Your Business Efficiently

When you start your online bank business, it’s essential to have the right technology in place to maximize efficiency. You need a computer with Internet access, and accounting software for tracking expenses and revenues. 

You may also want to invest in customer relationship management (CRM) software to help manage your customer accounts and an email marketing program to communicate with your customers regularly.

In addition, you will need a secure server and an SSL certificate so you can process online transactions safely and securely.

7. Market Your Online Bank Business to Potential Customers

Before selling your products and services, you must let the world know you exist. The first step is to create a website so people can learn more about your products and services and how they benefit them.

After you launch your website, start promoting it through social media channels like Facebook, LinkedIn, Instagram, and TikTok. Also consider networking with other people in the online bank industry through social media and blogs so they can help share your business. 

You also need to start gathering the materials needed to execute your promotions strategy, which is your strategy for attracting new customers. Online bank businesses should consider the following promotional strategies for which you should start getting prepared:

• Create a website that is user-friendly and easy to navigate.
• Use social media platforms like Facebook, LinkedIn, and Instagram to market your business.
• Join social media groups and discussion forums related to online banking to network with potential customers.
• Write blog posts and articles about online banking that will attract potential customers to your website.
• Develop an email marketing campaign that will promote your online bank business to potential customers.
• Develop print materials like brochures and flyers that you can distribute at trade shows or other events.
• Invest in search engine optimization (SEO) so potential customers can find your website easily online.

Read our article about how to market your online bank business for more tips.

8. Get New Customers & Grow Your Business

When you promote your products and services , you’ll start to get interest from potential customers . 

Make sure you’re ready to serve these customers . Also, be sure to establish systems to ensure consistency and reduce costs. And be sure to find and train the right people to help you grow your online bank business.

Read our article about how to effectively grow your online bank business to learn more.

Starting an Online Bank Business FAQs

Why start an online bank business.

The online banking industry is growing rapidly as more people conduct their financial transactions online. This provides a great opportunity for entrepreneurs to start an online bank business and tap into this growing market.

What is Needed to Start a Successful Online Bank Business?

To start a successful online bank business, you need the right technology and software in place to maximize efficiency. You also need to market your business effectively to potential customers. In addition, you need to find and train the right people to help you grow your business.

How Can I Market an Online Bank Business Online?

There are several ways you can market an online bank business online. You can start by creating a website and promoting it through social media channels like Facebook, LinkedIn, Instagram, and TikTok. You can also join social media groups and discussion forums related to online banking to network with potential customers. Additionally, you can write blog posts and articles about online banking that will attract potential customers to your website. Finally, you can develop an email marketing campaign to promote your online bank business to potential customers.

What are Some Tips for Starting an Online Bank Business?

Here are some tips for starting an online bank business:

• Invest in the right technology and software to maximize efficiency.
• Market your business effectively to potential customers.
• Find and train the right people to help you grow your business.
• Be sure to establish systems to ensure consistency and reduce costs.
• Stay up to date with industry trends and developments.

Where Can I Find a Simple Checklist for Starting an Online Bank Business?

A simple checklist to use when starting an online bank business is as follows:

• Name Your Online Bank Business : This should be done carefully, as your brand is important for attracting the right customers. A simple, memorable name will go a long way.
• Choose a Legal Form for Your Business : Whether you become a sole proprietorship, partnership, LLC, corporation or another option will depend on your business. Ensure that you are aware of all the implications of each type.
• Write an Online Bank Business Plan : Your business plan will also help you determine what your start-up costs will be and will provide a roadmap with which you can launch and grow .
• Apply for the Necessary Permits and Licenses : In most locations you will be required to apply for a business license and permits before you can begin operations.
• Determine Your Budget & Apply for Funding as Needed : You will need to know how much money you have to spend on your business-related expenses before opening any doors. If needed, apply for a small business loan or other funding options.
• Get the Technology & Software Needed to Run Your Business Efficiently : You need to have the right tools in place to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
• Market Your Online Bank Business to Potential Customers : A solid marketing plan will be crucial to your success. It should focus on attracting the right customers so that you can provide them with the products and services they truly need. 
• Get Customers & Grow Your Business : Once you have a solid marketing plan, it's time to actively pursue and secure those who could benefit the most from your products and services . 

An online bank business can be a great way to enter the banking industry. Following these tips, you can be on your way to starting a successful online bank business.

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Virtual cards 101: Simplifying commercial payments

From e-commerce to tap to pay to person-to-person transactions, everyday payments have largely been digitized. But business-to-business payments — more complex, often involving more authorization and oversight, and in many cases, higher amounts — have been slower to catch up. Cumbersome methods like wire transfers and, in the U.S. in particular, paper checks, still rule the day, but they are prone to errors and relatively slow. 

1. not physically existing as such but made by software to appear to do so.

2. carried out, accessed, or stored by means of a computer, especially over a network

To keep pace in this age of instant experiences and immediate validation, businesses of all kinds are turning to virtual cards to bring the ease, security and efficiencies of digitization to their operations. So what are virtual cards exactly, and how do they work?

What are virtual cards?

Virtual cards are a growing payment option in B2B payments. They are temporary card numbers randomly generated and linked to a funding account that has an established line of credit. They are typically used for a specific transaction or for a specific period of time. They are often integrated into accounting, enterprise resource planning and expense management systems to streamline back-office processes, including automating reconciliation.

How are virtual cards different from traditional payment cards?

Virtual cards are different in that there is no physical card, but otherwise they work in a similar way for purchases, with a 16-digit card number, an expiration date and a three-digit CVV code. Some virtual cards can even be added to mobile wallets for tap-to-pay functionality, just like digital versions of consumer credit or debit cards.  

How do virtual cards work?

Virtual cards work like traditional payment cards, but the businesses using them have more control over spending. They can customize parameters, and the cards can be linked to specific business units or projects for improved monitoring, reconciliation and invoice management.

Virtual cards can be generated instantly to use for online payments — no waiting for the physical card to arrive in the mail.

What are some of the controls offered by virtual cards?

Virtual cards offer businesses the opportunity to customize spending controls, including limits on budget, the length of time it can be used — a day or a week, for example — and where the card can be used, say by designating specific merchants or only certain merchant codes. For example, a virtual card issued to cover the costs of a client dinner could not be used to buy a new outfit at the nearby shopping mall.

What are the benefits of virtual cards?

The benefits of virtual cards are the same as those of plastic cards – convenience and security, to name a few – but on top of these, they also offer spending controls and more flexibility through new payment use cases.

These advantages apply to both sides of commercial transactions. For merchants or suppliers, accepting virtual cards can bring payment certainty and help to reduce days sales outstanding , which refers to the average number of days it takes a company to collect payment for a sale and is an indicator of working capital.  

Unlike traditional checks, which are still commonly used in business-to-business payments in the U.S. and generally take at least one working day to settle, virtual card payments are settled almost immediately, accelerating cash flow. Merchants also benefit from more detailed payment data, which can help them on their journey to automated reconciliation.

For buyers, the controls of virtual cards are critical, reducing creep in budgets and ensuring funds are being spent appropriately. In addition, virtual cards reduce the risk of fraud or misuse because they can only be authorized under specific parameters, after which the number is deactivated. They can also offer more detailed monitoring, as the unique card number used in each transaction means it can be tracked with more precision, and easier reconciliation because the additional data allows for one-to-one payment match.

Some virtual cards can also convert currency in real time, which can be beneficial for companies with international supply chains. To extend the use cases for virtual cards beyond online and over-the-phone payments, mobile virtual cards — where the card is stored in a mobile wallet and used for contactless payments — bring the ease of tap-to-pay retail payments to corporate transactions.

Why do businesses use virtual cards?

Businesses use virtual cards for a growing number of circumstances — anywhere there is a need for increased efficiency and greater control, flexibility and security. Here are some of the ways Mastercard is unlocking the benefits of virtual cards across a wide and growing array of industries.

Accounts payable

Many businesses manage thousands of suppliers and tens of thousands of invoices. Virtual cards, which include rich payment data, can improve cash flow on both sides of the transaction, because they offer faster payment and simpler reconciliation by connecting orders, invoices and status of payments . That, in turn, can strengthen relationships between buyers and suppliers. The transaction-level data tied to each virtual card, including the data, amount, item and merchant, can be automatically entered into an accounts payable system without tedious and error-prone manual entry, to enable greater efficiency and accuracy.

Corporate travel

Business travel has rebounded , but many companies are still struggling with complex and outdated expense and reimbursement processes. Virtual cards can be used to book travel and cover the cost of entertaining clients , with customized controls to manage spending and seamless expense reconciliation with enhanced data. And with mobile virtual cards, frequent flyers and road warriors can simply tap to pay for hotels, meals or incidentals where contactless payments are accepted. Mobile virtual cards have an additional layer of security called tokenization : Any card stored in a digital wallet employs an encryption technique that substitutes the card’s account number with an alternative card number called a token, so the actual account details are never shared during a transaction.

Depending on company policy, business travelers equipped with virtual cards may not have to keep track of piles of physical receipts. Virtual cards also eliminate the need to pay with a personal card and wait for reimbursement.

Virtual cards can also be issued to job candidates to cover spending during the recruitment process, or to pay for moving expenses or temporary housing for employees who are relocating.

Trade shows, events and conferences

For event planners, it can be difficult to manage the budgets for many projects and vendors at the same time — and it’s easy for costs to balloon. Virtual cards can simplify payments and reporting and help keep events to a specific budget via controls while still offering the flexibility to add money to a budget if needed.

Health care and insurance

Anyone who has visited a doctor in the past few decades knows that medical billing is complex and slow. It’s no different for the doctor’s office or hospital dealing with claim approvals and payouts. Health care providers often face bottlenecks in settling claims with insurance companies because of paper-heavy legacy systems in place that delay payments, triggering cash flow challenges and increasing borrowing costs. By embedding virtual cards into the claims-processing platforms that connect insurance companies to healthcare providers, everyone benefits from faster payments, greater visibility into claim status and easier reconciliation.

Fleet management

For fleet managers looking for ways to manage costs for fuel and maintenance and ensure drivers are adhering to company policy, mobile virtual cards can be linked to a specific vehicle to track fuel usage, for example, or even to specific gas stations with whom the company has preferential partnerships. The detailed transaction data can help fleet managers make more informed decisions, including ways to reduce fuel cost, manage drivers and optimize routes.

How can businesses integrate virtual cards into their systems?

Businesses can launch virtual cards directly through their issuing bank, but to get the most benefit, they can work with their technology software providers to integrate the cards into their digital business platforms, like enterprise resource planning or procurement systems, which can further speed up and simplify the way they work. Embedding payments into these platforms can reduce friction and transaction costs and offer greater data and insights, value-added services and even the ability to access credit and financing.

When virtual cards are accessed through the tools a business uses day to day, the payment can become a natural extension of its operations. Managing B2B payments used to require jumping between multiple business platforms, but embedding virtual cards opens the door to new, more convenient experiences where payments are seamlessly woven into the platforms that enterprises organize their business around.

What should you look for when selecting a virtual card provider?

When selecting a virtual card provider, look for the ability to integrate with existing systems, extensive reach, robust card controls and a great end-to-end user experience.

One of the greatest advantages of virtual cards is their ability to be embedded within a company’s existing workflows, such as the systems they use for accounting, treasury or procurement. By selecting a provider with many software integrations, businesses can easily bring virtual cards into their existing tools to unlock efficiencies and improve back-office processes.   

Looking for providers with extensive global card acceptance networks is also important for optimizing where businesses and their employees can use their virtual cards. With more virtual cards being enabled for mobile wallets, it is important to consider a provider with a large global footprint of contactless-enabled locations.

It’s also important to choose available controls based on a business’s needs. For instance, if a business is looking to improve travel and entertainment compliance and ensure that employees stay within a spending allowance while traveling for business, consider prioritizing a provider that offers robust spend controls.

Selecting a provider that enables virtual card transactions to be processed straight to their bank or acquirer — without the need to manually pore through emails, which is a risk-prone, slow and manual process — is also key. The ability to deliver a fast, secure end-to-end payment experience is where the future of B2B payments is headed.

Why we need consumer-grade experiences in the corporate world

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Citadel's Ken Griffin wants to build a massive NYC skyscraper that the city hopes will lure more workers back to the office

• Citadel's Ken Griffin filed plans alongside Vornado and Rudin for a 62-story NYC skyscraper.
• The mayor's office said the building would bolster an ongoing revitalization of midtown.
• Beyond NYC, Griffin has said also Miami could become the US' next financial hub.

Citadel's Ken Griffin is planning a 62-story skyscraper in the heart of midtown that New York City's mayor hopes will bolster the ongoing revitalization of the neighborhood after many buildings went vacant during the pandemic .

Real estate developers Vornado Realty Trust and Rudin filed plans for the project alongside Griffin (whose Citadel and Citadel Securities will serve as anchor tenants), the mayor's office said Tuesday.

Located at 350 Park Avenue, the building is expected to be completed in 2032, and will house over 6,000 jobs. It will also comprise a public concourse with seating, green space, and art.

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Developers purchased air rights from St. Patrick's Cathedral and Saint Bartholomew's Church in order to construct the building. The prices they paid will fund upkeep for both churches, the Mayor's office said, to the tune of $150 million.

"This project will build on our continued efforts to energize Midtown Manhattan as the world's most important business address and an economic engine for working-class New Yorkers," Adams said in a statement.

There have been signs that New Yorkers are increasingly working in person. Bloomberg reported Wednesday that the city's return-to-office rate had reached almost 80% of pre-pandemic levels, according to a new study.

For his part, Griffin highlighted in a statement the building's "incredible light, 360-degree views, and spacious layouts in one of the leading financial centers in the world."

Griffin has previously discussed how remote work can harm corporate culture, and a spokesperson for Citadel told Business Insider the company has been back in the office full-time since June 2021.

But Griffin doesn't have his sights set exclusively on New York. In November, the billionaire hedge fund manager said Miami — where Citadel moved from Chicago in 2022 — could one day overtake New York as the financial hub of the United States.

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Online appointment booking software, online appointment booking made easy.

Drive sales and improve staff efficiency with a fully automated appointment booking solution and point of sale from U.S. Bank.

Fill your calendar and simplify workflow.

With our online appointment booking software, you don’t have to wait for the phone to ring. You can easily view appointments for the entire team or filter by staff member. With a click, you can create, confirm, change or cancel appointments.

Share your schedule.

Easily share your schedule with customers. Auto accept or manually confirm appointments.

Reserve openings.

Hide slots to reserve them for walk-ins and phone bookings.

Showcase your team.

Publish staff profiles and pictures to showcase your team’s skills.

Book anywhere.

Create a booking button on your website, so your customers can schedule appointments 24/7.

Assign staff.

Automatically assign available staff of give your customers the option to choose.

Streamline operations.

Our online appointment booking software makes managing multiple schedules, team members and services a breeze.

Keep business moving with seamless scheduling.

Online booking for your customers has never been easier. A point-of-sale system from U.S. Bank gives you the tools to create a mobile-friendly booking site in minutes. Your customers can book appointments on their device and you can control it all with our POS.

Set your service times.

Create fixed or variable length service times. Ideal for spas, salons and service-based business. Add start and end pad times for setup and cleanup.

Manage staff.

Assign services to staff based on role and experience. Set up staff schedules to fit their hours. Create time off to block staff availability.

Ramp up sales.

Access to insights can help you focus on the most revenue-generating activities. For example, view a summary of all appointments including cancellations and no-shows and see which services are most popular. Get a detailed breakdown of staff utilization and identify where you can make improvements.

The support you need when you need it

24/7 support.

Never miss a beat with our industry-leading 24/7 customer support. A real person is always available to answer your questions at no additional cost.

Everyday Funding

Improve cash flow with industry-leading funding, available 7 days a week, with no daily funding limits. 1

Safe & secure payments

With EMV, contactless payment options, PCI-DSS, and end-to-end encryption, your customer payment data is protected by the latest authentication and security technology.

Let us help you find a POS plan.

Whatever your POS needs, our specialists can help you build a customized system. We can also help you with more robust solutions including e-commerce.

Frequently asked questions

What are the benefits of using online appointment booking.

Online appointment booking offers various benefits, including the convenience of scheduling appointments at any time, 24/7 accessibility, and the ability to view real-time availability. It reduces phone wait times, minimizes scheduling errors, and allows customers to plan appointments at their convenience.

Is online appointment booking secure?

Yes, reputable online appointment booking systems prioritize security. U.S. Bank uses encryption protocols to safeguard user data during the booking process. Additionally, our online booking software uses secure login procedures and complies with data protection regulations to ensure the confidentiality and privacy of customer information.

Can businesses customize the online booking experience for their specific needs?

Yes, our online appointment booking platform offers customization options. You can tailor the booking interface to match your branding, set specific appointment durations, define available time slots, and integrate additional features such as automatic reminders or follow-up communication. This flexibility allows businesses to create a personalized and efficient booking experience for their customers.

How can online booking software benefit businesses?

Online booking software offers several benefits for businesses, including increased efficiency, reduced administrative workload, improved customer satisfaction, and the ability to attract new customers. It provides a convenient way for customers to schedule appointments or make reservations, leading to enhanced operational effectiveness and better overall customer experience.

Ready to get started? 

Everyday Funding is available at no additional charge to U.S. Bank Payment Solutions merchants with a U.S. Bank  Business Checking account. Funding speeds will vary between weekdays and weekends and are dependent on batch times. Funding is based on batch and will be processed every day, including weekends. Activation may take between three to five business days from date of Everyday Funding service request. Once the file is activated, there will be a change in the description of the payment when it is posted to your bank account.

Services may be subject to credit approval. Eligibility requirements, restrictions and fees may apply. See a business banker for details.

Using these programs requires a merchant processing account. See a business banker for details.

Deposit products are offered by U.S. Bank National Association. Member FDIC.

140 BMO customers say they lost $1.5M in transfer frauds, plan to sue bank

Bank says it works to detect cybercrime and prevent customers from being scammed.

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Elizabeth Bernas and her husband had planned to use the proceeds from their home sale to renovate their new house in Ajax, Ont., to pay for their children's university tuition and to go on a family vacation.

But before they could, they say someone accessed their Bank of Montreal account without authorization in late 2022 and withdrew more than $63,000 through a series of transfers that the bank won't reimburse. 

"We were shocked," Bernas said. "We almost dropped on the floor." 

BMO told Bernas it won't compensate them because it appeared the transfers were done on their device, there were no failed login attempts to the account, and a malware scan of the computer didn't show any irregularities, according to a letter from the bank CBC News has viewed. 

"We were just so depressed; sleepless nights," Bernas said. "We all want our money back." 

CBC News first reported on similar unauthorized transfers among BMO customers two years ago and has since heard from around another two dozen.

Now, more than 140 customers with similar experiences from across the country formed a group with the plan of filing a class-action lawsuit against the bank. Collectively, they've lost more than $1.5 million, according to organizer Lisa Wong. 

"We have people from all walks of life," she said. "We have new immigrants, we have professionals like doctors, engineers and we have business owners." 

"[BMO's security] is not protecting us against the growing, sophisticated cybercrime," said Wong, who lost $15,500, according to bank documents. 

Toronto teacher Joe Jacobs and his wife lost $20,000 when a cybercriminal seemingly accessed their line of credit, banking documents show. 

Now, they're responsible for the monthly payments, plus interest. In order to afford it, Jacobs says his family is renting out a room in their home and they've had to delay sending one of their children to university.

"It's really difficult," he said.

BMO spokesperson Jeff Roman says, like other banks around the world, BMO continually adapts to help customers stay ahead of cybercrime. 

"In the digital world we live in, these scams are fast evolving and are becoming more sophisticated , targeting millions of Canadians with malicious texts and phone calls," Roman said.

"We realize how difficult it is when a customer unfortunately falls victim to these criminals, and we provide support based on the specifics of their individual cases and circumstances." 

He says BMO is focused on detecting and preventing these situations when possible, but can't share details for security reasons.

Wire and e-transfer fraud growing 

E-transfer fraud in general is a "significant increasing concern," according to the Ombudsman for Banking and Investment Services (OBSI), the national organization that mediates some disputes between member banks and clients. 

OBSI spokesperson Mark Wright says e-transfer cases are typically difficult because the wrongdoer can't be located. 

Also, "in most of these cases, we are not able to recommend that the bank pay compensation to the consumer because our investigations show the consumer has unknowingly shared or given access to their confidential information and the bank has complied with its obligations," he said in an email.

How the fraud works 

CBC News spoke with about half a dozen clients who say their BMO chequing, savings and/or line of credit accounts were drained when fraudsters somehow got access and sent themselves money through e-transfers, global wire transfers and by setting themselves up as payees for bills. 

BMO told them they won't be reimbursed because their passwords were used correctly and, in some cases, one-time codes were sent and entered correctly and the IP addresses matched those of the client, according to emails from the bank. 

The customers filed reports with police and the OBSI, who sided with the bank. 

140 BMO customers plan to sue bank after alleged transfer frauds

Kenrick Bagnall, a former Toronto police cybercrime investigator who worked in the bank security sector, says he believes the customers' devices were infected by malware, which harvests digital credentials like passwords and IP addresses from a computer, tablet or phone.

Bagnall says cybercriminals often use social media to gain information about an individual, then send them a targeted phishing email based on their interests and recent activity, which if clicked on, can infect a device.

The malware — which can evade even advanced scanning programs — then bundles the stolen information into a package, which is sold on the dark web for between $50 to $200, depending on several variables, according to Bagnall.

Cybercriminals can then mirror the victim's computer and log into accounts. 

"It actually looks like the victim is logging in themselves when they're not," Bagnall said. "So, as far as the checks and balances and controls and the reasonable effort that the bank is putting in, from a security perspective, they're doing the right things."

'Blame the victim'

Wong says BMO should have done more to reduce the risk of its clients' money being stolen, should have flagged suspicious activity, stopped it and alerted customers.

Emile Landry, who lives in the Ottawa area, lost more than $22,000 in January through a series of wire transfers — a service he says he's never used in his 25 years of banking with BMO. 

"After the first money transfer, why did they not stop it and question it instead of letting all four go through and empty the accounts?" said Landry who, like Bernas and Jacobs, is part of the group planning to sue the bank. 

"At 80 years old… it hurts a lot. I had to get my son to lend me a few dollars."

BMO says customers can sign up for alerts, which warn customers if its system suspects unusual activity. 

But the co-founder of Democracy Watch, a government accountability and corporate responsibility advocacy group, says that sort of security measure should be automatic.

Duff Conacher suggests all banks should have customers set up maximum dollar amount for transactions and, if there's an attempt to exceed it, the customer must sign off. 

He says banks pushed consumers into online banking and so the liability should, at least in part, lie with banks. 

"The current system is a 'blame the victim' system as opposed to blame the institution that's responsible for setting up online banking and maintaining it and failing to maintain it in a way that ensures it's safe," Conacher said.

• CBC Investigates Despite ombudsman complaint, Manitoba woman not optimistic she'll get money back after bank fraud
• BMO customers out thousands of dollars unable to prove fraudulent e-transfers weren't their fault
• GO PUBLIC Banks deny compensation when hackers steal customers' money

Jacobs, the teacher, says it's not reasonable for consumers to be fully up to date on all things cybercrime and the changing vulnerabilities.

"The whole system is so vulnerable and people are so vulnerable to being hacked or to having their security compromised and yet it's a system that we're essentially forced to have to participate in," he said. 

"I just feel like the bank has to take a bigger role in providing security for their customers."

The Canadian Bankers Association, which represents Canada's largest institutions, didn't directly answer a question about whether banks should consider liability for these types of losses. Instead, spokesperson Maggie Cheung said Canadian banks "are committed to helping protect their customers from financial scams" and the organization works with its members to help customers detect and prevent scams. 

Roman, the BMO spokesperson, says the bank is determined to work with the government, the technology industry and other banks to help Canadians defend themselves against scams. 

Tips to protect yourself

Bagnall suggests "slowing down and being hypersensitive" when browsing websites or receiving emails. 

He also reminds people to be cognizant of what they share on social media and that long passwords equal strong passwords. 

Bagnall's five recommendations to both companies and individuals are: 

• Be aware of what data is stored where, and under what sort of security.
• Be aware of vulnerabilities — both digital and human.
• Educate yourself on current threats.
• Plan ahead by imagining a threat or problem. What would you do if you lost your phone, for instance? 
• Have a recovery plan in case disaster strikes. How will you get your data back, for instance?  
• GO PUBLIC Woman loses $340K in wire transfer scam — alleges 4 banks did little to stop it
• Alberta BMO customer on the hook after almost $10K disappeared from her account

ABOUT THE AUTHOR

Angelina King is a reporter with CBC Toronto's enterprise unit where she covers a wide range of topics. She has a particular interest in crime, justice issues and human interest stories. Angelina started her career in her home city of Saskatoon where she spent much of her time covering the courts. You can contact her at [email protected] or @angelinaaking

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• GO PUBLIC Banks tell dozens of customers they're to blame for thousands of dollars lost to e-transfer fraudsters

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7 best bank account bonuses for April 2024 (up to $600)

By Joshua Rodriguez

Edited By Matt Richardson

Updated on: April 17, 2024 / 11:08 AM EDT / CBS News

It's never a bad time to explore your  bank account options . As financial institutions continue to compete for new clients, they're offering compelling bonuses on new checking , savings and other bank accounts. In fact, you can earn bonuses worth thousands of dollars when you move your money to some financial institutions. 

Then again, banks don't usually just hand bonus money over because you've opened an account. There are usually other requirements that you'll need to meet to access your bonus cash . In most cases, you'll need to make minimum deposits and maintain minimum balances for a predetermined period of time. 

Nonetheless, today's leading financial institutions are offering bonuses that are hard to ignore. Below, we'll list some of the best ones to explore this month. 

Compare today's leading savings accounts here now . 

4 best savings account bonuses for April 2024 (up to $600)

If you're looking for the best savings account bonuses, consider opening one of the accounts below (note that all bonuses listed below are only available to new customers): 

• Wells Fargo - $525 bonus : You could earn a $525 bonus by opening a Wells Fargo savings account. However, you'll need to deposit $25,000 within the first 30 days of opening your account and maintain a $25,000  minimum balance  for 90 days to access the bonus. The account comes with other features, too, like free financial health resources and automatic transfers. This offer is valid through June 25, 2024. 
• Barclays - $200 bonus : Barclays is offering a $200 sign-up bonus to new customers who open savings accounts. In order to access the bonus, you'll have to deposit $25,000 within 30 days of opening your account and maintain a $25,000 minimum balance for 120 consecutive days. The account also features no minimum balances and direct deposits to bring simplicity to your savings. This offer is valid through May 3, 2024. 
• TD Bank - $200 bonus : You can earn a $200 bonus by opening a new savings account with TD Bank. In order to qualify for the stated bonus, you'll have to deposit at least $10,000 into your new account within 20 days of opening it. You'll also need to maintain a $10,000 balance in your account for 90 consecutive days. You can also use the account to put your savings on autopilot with free  automatic transfers  from your TD Bank checking account to your savings account. This offer is valid through June 30, 2024. 
• Alliant Credit Union - $100 bonus : A new savings account with Alliant Bank could add an extra $100 to your savings account balance after a year. To qualify, you'll need to deposit at least $100 per month for 12 consecutive months. If you've maintained your savings, and have at least a $1,200 balance at the end of the 12-month period, you'll receive a $100 bonus. This offer is valid through December 1, 2024. 

Open a high-yield savings account now to earn more on your money . 

Other bank bonuses to consider 

If you're interested in  opening a new checking account  or other type, you could gain access to a meaningful bonus: 

• Huntington National Bank (Platinum Perks) - $600 bonus : You can earn a $600 bonus when you make a total of $25,000 of deposits into a new Huntington National Bank Platinum Perks checking account within 90 days of opening it. You'll also need to keep your account open for 90 days after meeting the minimum deposit requirement above. Huntington National Bank's terms and conditions don't say that you need to maintain any minimum balance to qualify for the bonus. But, you'll pay a $25 fee if you don't maintain a $25,000 total relationship balance (the total balance between all of your Huntington National Bank accounts). This offer is valid through June 7, 2024. 

Though the following are not specific to savings account bonuses, they do involve opening savings accounts. Here are a couple of other bank bonuses to consider: 

• PNC Bank - $400 bonus : New PNC Bank Virtual Wallet customers can earn up to $400 in bonuses. Earn a $100 bonus by making direct deposits totaling $500 or more within the first 60 days of opening your account or earn $200 by making $2,000 or more in direct deposits in your first 60 days. However, if you want the maximum $400 bonus you'll need to make $5,000 in direct deposits in your first 60 days. This offer is valid through April 30, 2024.
• Sofi - $300 bonus : You can earn a $300 bonus when you open a SoFi checking and savings account . You'll need to set up direct deposit to earn the bonus and the amount of money you direct deposit between now and June 30, 2024 will determine the size of your bonus. Deposit between $1,000 and $4,999.99 and you'll earn a $50 bonus. If you receive $5,000 or more in direct deposits by the end of the promotional period, you'll get a $300 bonus. This offer is valid through June 30, 2024. 

Make your money work for you with a savings account today . 

The bottom line

You could earn hundreds of dollars in bonuses by opening bank accounts with leading financial institutions. While that's exciting news, it's also important to consider factors like the long-term return rate on your savings and how other new accounts might fit in with your financial needs. So, as you compare bonuses, make sure you also compare APYs, fees and other features . 

Joshua Rodriguez is a personal finance and investing writer with a passion for his craft. When he's not working, he enjoys time with his wife, two kids, two dogs and two ducks.

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