Starting a bank is not a business you can launch like a restaurant or consulting firm

You cannot start a bank the way you start most businesses. Banking is one of the most heavily regulated industries in the United States, and the federal government and your state both control who can take deposits and lend money. Before you can open for business, you need a charter — a license from either the Office of the Comptroller of the Currency (OCC) if you want a national bank, or your state banking regulator if you want a state-chartered bank. Without a charter, you cannot legally accept deposits or call yourself a bank.

The charter process takes years, costs hundreds of thousands of dollars in legal and consulting fees alone, and requires you to prove you have the capital, management expertise, and business plan to operate safely. Most people who think they want to start a bank are actually looking for something else: a way to offer financial services without building a full bank from scratch. That route exists, but it looks different.

Key Takeaways

  • A bank charter from the OCC or your state banking regulator is legally required to take deposits, and the application process typically takes two to three years and costs $500,000 to $2 million in fees and preparation.
  • You must prove you have sufficient capital (usually $10 million to $25 million minimum), a detailed business plan, may have access to management, and a board of directors before regulators will even consider your application.
  • If you want to offer financial services without a full bank charter, you can partner with an existing bank through a bank-as-a-service model, where they hold deposits and you handle customer relationships.
  • Fintech companies and payment platforms often use bank partnerships instead of getting their own charter because the regulatory burden is lower and the time to market is faster.
  • State and federal regulators conduct extensive background checks, stress tests, and ongoing examinations to ensure any new bank can survive economic downturns and protect customer deposits.

The charter application: what regulators actually require

If you are pursuing a full bank charter, you will submit your application to either the OCC (for a national bank) or your state's banking department (for a state bank). The OCC publishes a Comptroller's Handbook that outlines what they expect to see. Your application must include a detailed business plan covering at least five years, proof of your capital, the résumés and background of your management team and board, market analysis showing demand for your bank in your area, and financial projections.

Regulators will conduct background checks on every director, officer, and major shareholder. They will review your personal credit history, criminal record, and any regulatory actions against you in other industries. If you have ever been involved in a failed bank, a fraud case, or a significant regulatory violation, your application will likely be denied. The OCC and state regulators also require you to show that your bank will serve a genuine community need — they do not charter banks that simply duplicate services already available in the market.

After your initial application is accepted for processing, regulators will ask for more information, conduct site visits, and may require you to revise your business plan. This back-and-forth typically takes 18 to 36 months. During this time, you are paying lawyers, consultants, and accountants to prepare responses and gather documentation. By the time you receive a charter, you will have spent $500,000 to $2 million just on the application process, before you have opened a single branch or hired a single employee.

Capital requirements and ongoing regulatory costs

Even if your charter is approved, you cannot open your doors without meeting minimum capital requirements. The amount varies by the type of bank and your location, but most new national banks must have at least $10 million to $25 million in capital before they can begin operations. This capital comes from you, your investors, or both. It sits in the bank as a safety cushion — regulators require it so that if your bank loses money in its early years, depositors' funds are protected.

Once you are chartered and operating, regulators do not stop watching. The OCC or your state banking regulator will conduct examinations at least once a year, sometimes more often in your first few years. They will review your loan portfolio, your risk management practices, your compliance with anti-money-laundering rules, and your capital levels. If they find problems, they can issue a cease-and-desist order, force you to raise more capital, or in extreme cases, revoke your charter and close the bank.

You will also need to pay deposit insurance premiums to the Federal Deposit Insurance Corporation (FDIC). These premiums are based on the size of your deposits and your risk profile. In your early years, when you are building deposits and may not be profitable, these premiums can be a significant ongoing cost.

Why most fintech companies use bank partnerships instead

If you want to offer financial services — payment processing, lending, savings accounts, or investment tools — you do not necessarily need your own bank charter. Many fintech companies, payment platforms, and online lenders partner with an existing bank through what is called a bank-as-a-service (BaaS) arrangement. In this model, the partner bank holds customer deposits and maintains the banking license. You handle customer acquisition, product design, and the user experience. The bank provides the infrastructure and regulatory compliance.

This approach is much faster and cheaper. You can launch in months instead of years, and you do not need to raise tens of millions in capital upfront. Companies like Chime, Revolut, and many online lenders use this model. The trade-off is that you do not own the banking relationship directly — the bank does — and you have less control over certain decisions. But for most entrepreneurs, this is a reasonable compromise.

Some companies also operate as money transmitters or payment processors without a bank charter. These roles are regulated differently — usually at the state level through money transmitter licenses — and have lower capital requirements. However, money transmitters cannot take deposits the way banks do. They can hold customer funds temporarily while processing payments, but they cannot offer savings accounts or make loans.

The difference between a national charter and a state charter

If you do pursue a full bank charter, you must choose between a national charter (from the OCC) and a state charter (from your state's banking regulator). A national bank is regulated primarily by the OCC and the FDIC. A state bank is regulated by your state's banking department and also by the FDIC if it chooses federal deposit insurance. State-chartered banks may face different capital requirements, branching rules, and lending limits depending on your state.

National charters are generally more standardized — the OCC applies the same rules across all 50 states. State charters can be easier to obtain in some states because state regulators may have different priorities or less stringent requirements than the OCC. However, state regulation also means you will deal with two regulators instead of one: your state banking department and the FDIC. Some entrepreneurs choose a state charter if they plan to operate primarily in one state and believe their state regulator will be more receptive to their business model.

What happens if your charter application is denied

If the OCC or your state regulator denies your charter application, you have limited options. You can reapply after addressing the reasons for denial, but this means more time and more money. You cannot appeal the decision in court — regulators have broad discretion to deny charters based on their judgment about whether your bank would be safe and sound. If you were denied because of personal background issues, those problems will likely disqualify you from future applications as well.

This is why most people who want to enter the financial services industry choose the bank partnership route instead. It avoids the years of uncertainty and the risk of spending hundreds of thousands of dollars only to be told no.

Frequently Asked Questions

How much money do I need to start a bank?

You need at least $500,000 to $2 million just for the charter application process. If your application is approved, you will need an additional $10 million to $25 million in capital to actually open the bank, depending on your location and the type of bank. This capital must come from you, investors, or both.

Can I start a bank online without a physical location?

Yes, online banks can be chartered, but they still need a charter from the OCC or a state regulator. They must meet the same capital requirements and undergo the same examination process as brick-and-mortar banks. The main difference is that they do not maintain physical branches, which can lower some operating costs but does not reduce regulatory requirements.

What if I want to offer financial services but do not want a bank charter?

You can partner with an existing bank through a bank-as-a-service arrangement, or you can obtain a money transmitter license from your state if you want to process payments. Money transmitters cannot take deposits or make loans, but they can hold customer funds temporarily during transactions. This route is faster and cheaper than getting a bank charter.

How long does it take to get a bank charter?

The OCC typically takes 18 to 36 months to process a national bank charter application, from initial submission to final approval. State charters may be faster or slower depending on your state. During this time, regulators will ask for additional information and may require you to revise your business plan multiple times.

Do I need a board of directors to start a bank?

Yes. Regulators require a board of directors with members who have relevant financial or business experience. Board members must pass background checks and cannot have criminal records or regulatory violations. Most regulators expect at least five to seven board members, though the exact number varies.