top of page
Header image – 6.jpg

NEWS

What it takes to become a bank: People

Updated: 2 days ago

Starting a bank is a complex endeavour that cannot be tackled alone. Even the most visionary founders must recognise that the success of their venture hinges on the team they assemble.


In this series, we ask what it really takes to become a bank, exploring the challenges and rewards, with insight from experts who’ve done it themselves.  Our first article covered banking fundamentals: deciding to become a bank, simplifying offerings, and building a strong business plan.


In the second instalment, our expert panel Ivan Frampton, Founder and MD at TriFidus;  Vishwas Khanna, Partner at Avantage Reply; and Eddie Trahearn, CFO at GB Bank, discuss:

  • which roles to fill first

  • why cultural fit matters

  • what the regulator is looking for in your senior team

  • how a flexible talent bench could serve you.


Investing in human capital

If you want to create a bank, and you have never done it before, where do you start? How can you find the people with the right skills, experience, temperament and cultural fit?  When do you need to bring in specialist expertise? Many first-time bank founders learn the answers to these questions the hard way, wasting time and money. We’d suggest starting with the first critical hires, which will likely be your CEO and CFO.


The first appointments: Your CEO and CFO

The CEO needs to understand both the banking industry and the regulatory landscape. Many ‘non-bank’ founders believe they can take on the CEO role themselves, but running a bank requires a specific temperament and skill set. The regulator will be looking keenly at the competency and experience of the proposed CEO and will withhold authorisation if they are not satisfied.


Khanna explains: "Many aspiring bank founders are technologists or product specialists who underestimate regulatory complexities; their optimism often fades when they first encounter a regulator. It's not enough to be a visionary; you need to be someone who can navigate complex regulations, make difficult strategic decisions, and lead a team through turbulent times.”


The CFO, meanwhile, must be financially astute and experienced in forecasting, budgeting, and financial modelling. “If you have a good CEO and a CFO with strong FP&A and Prudential Regulation experience, you’re 90% there with your application,” says Trahearn. “Why? Because roughly 75% of a bank application involves financial tables and outputs from your business financial model.”


You need to have your financial model in place before you go much further in building out your team. There are two reasons for this. “Firstly, too many decisions are contingent on having the financial model, its absence will hinder other experts until it is in place,” says Frampton. “Secondly, the financial model should reflect the big costs, so you know your plan can work.”


Non-bank lenders are often surprised by the increased regulatory costs required from higher capital, liquidity, and compliance when they become a bank. “These costs are better known upfront, and, with a good financial model, some capital costs could be mitigated by optimising the lending strategy,” says Frampton.


Key takeaway: Bring on board a CFO that will build, or invest in, a robust financial model at the outset. This will give you the clarity you need to time future hires.


Get the right talent on your bench

Building a bank is expensive. One of your biggest costs will be the people with the skills and experience to get you over the finish line. Remember it’s a sustained process that will last at least two years but probably more like four – if you’re well organised. It’s a long cash burn.


First-time founders often rush out looking for talent to fill key roles but that is another potentially costly mistake. Trahearn, who has been through this process several times, points out: “There is a fundamental difference in the skills required to build a bank versus those needed to run one.”


Candidates from larger, more established banks at times lack the firsthand knowledge needed to navigate the challenges of a startup environment. This is an important consideration when there is so much to set up from scratch and you’re trying to do it quickly to meet tight regulatory timelines and contain costs.


Finding good people with this prior experience is not easy. The process of creating a bank takes such a physical and emotional toll, many people do not want to repeat it twice! 


Key takeaway: Look for people with experience of building a bank in a start-up environment.


Then you need to consider if you should hire someone full time, or whether part time or consultancy support is enough in the beginning. "People costs go beyond just financial figures; there are emotional and physical challenges too. Bringing in external experts offers fresh perspectives and flexibility, as you may not need certain skills full time at the outset," Trahearn notes.


Key takeaway: Create a bench of flexible talent to support your journey by complementing and nurturing key skills within your permanent team.


The importance of culture

Beyond hiring for skill, founders must hire for culture. Regulators will be looking for evidence that you are creating a culture that takes a bank’s fiduciary and regulatory responsibilities seriously. An important indicator is the reputation of those you have hired, particularly in key positions.


Khanna explains: “Reputation matters immensely to the regulator, who will take a dim view of anyone with a questionable past. People who look good on paper might be rejected if their credentials are assessed to not have ‘what it takes’ to be a credible bank leader.”


Unfortunately, in some instances, the regulator may not explicitly tell you this is the reason they are having difficulty approving your application.


Key takeaway: Your senior hires must have unblemished reputations and be able to build a proactively compliant culture.


Summary

Building a bank from the ground up is one of the most challenging endeavours any entrepreneur can undertake. Success depends heavily on surrounding yourself with the right people, from the CEO and CFO down to the consultants and staff that support your efforts. Your team must have both the technical knowledge and practical experience to deal with regulatory frameworks, risk planning, and financial modelling.


While having the right product and regulatory compliance is essential, it’s the people who will make or break your venture. By recruiting smartly, timing your hires, and bringing in individuals who share your vision and values, you give your fledgling enterprise the highest chance of success.



Look out for our next article in this series which covers the practical challenges of capital and liquidity management.


If you need advice on setting up a bank, from your business plan to your financial model, TriFidus can help. Contact our specialists today

 

All views expressed are personal and do not necessarily represent the views of interviewees’ organisations.




bottom of page