In this series of articles on alternative lending, Simon Lafferty outlines the process of becoming a bank and some of the main considerations involved in that process.In the past decade, approximately thirty six (36) new banks have been authorised in the UK. There is usually only one reason why it might be necessary to be a bank : to accept (i.e. be funded by) deposits. If the firm wants to be funded by deposits, then the firm will need to be authorised as a deposit-taker, most likely in the form of a bank.
One of the key commercial attractions of deposit funding is that it can enable a lender to "own" their credit policy independently of funders (e.g. wholesale funders) which can speed up the decision-making process and allow the lender to exploit opportunities that would otherwise be unavailable (e.g. because they are outside the eligibility criteria of wholesale funders).
Read the full article to know what is involved in becoming a UK bank.
Sign up to our email digest
Click to subscribe or manage your email preferences.