How to Start a Bank

In a vast and fast-growing county like Nigeria, we are faced with an ever-increasing population which has variegated financial needs. This creates the need for the establishment of more banks to meet these needs and/or which can solve the issues inherent in present-day banking activities. For some people, the issues relate to certain banking polices while for others it is trust issues. These drive their patronage to other banks.

The establishment of banks nationwide is something that cannot run out of significance because of the population of businesses and financial transactions. According to statistics, 43% of citizens living in Nigeria either operate an account or intend to do so. Different banks cater to different interests. Some of these interests may be on an individualist level or a corporate level.

Categories Of Banks In Nigeria

Amidst the numerous banks scattered across the country, we can classify them into three distinct categories. These categories have all been permitted to carry out operations in Nigeria by the BOFIA (Banks and Other Financial Institution).

They include:

  1. Merchant banks,
  2. Commercial Banks, and,
  3. Specialized Banks, some of which includes non-interest Banks, mortgage banks Microfinance Banks and Development Banks.

All the categories mentioned are licensed to operate under the guidelines of the Central Bank of Nigeria (CBN). They may be owned privately or by the government.

Steps to Start a Bank

Steps to Start a Bank in Nigeria

Gain Sufficient Knowledge Of The Financial Service Sector

Unlike other sectors, the financial sector is quite a complex aspect to deal with. You need to gain relevant knowledge of money and what it takes to run a system as complex as that. By doing so, you arrive at a higher level of financial knowledge to help you satisfy your customers and meet their demands.

There are a lot of rules guiding the operation of the banking sector. You need to arm yourself with these relevant information before you set out to start a bank. What am I saying here? I am saying that you need to be well-vested in the running of a bank. This you can get by studying Banking and Finance at a Tertiary Institution in Nigeria or Overseas, especially a University.

Obtain the Appropriate Banking Experience

To be able to operate and handle a bank, you need as much experience as you can get. It is not as simple as you can have in coffee shops, supermarkets, or even schools. You need a wide range of encounters in and out of the system to build your survival rate in this sector.

You need to make comparisons with other banks and understand how they are being run. As you would notice, there are some sensitive details you won’t get until you get hands-on experience or have someone share with you what exactly operating a bank entails.

This is why you won’t find bank owners who haven’t served in the system. As they grew in ranks and experience, they were able to set up theirs.

To help you build a solid and adequate knowledge-base, you need to have passed through series of educational trainings and certifications. This alone doesn’t guarantee that you are well-equipped to handle the pressure from the provision financial and non-financial services in a bank. You would also need managerial and business skills to plow your way to success.

Decide On The Type Of Bank You Want To Operate

Earlier, I established that there are different types of banks that are established in the country. You need to know which one of them that you would love to open. The different bank types have their unique requirements and demands. The level of preparation and procedures for establishment and operation of each of them is also not the same. You need to know what category you are ready to embark on.

Conduct Thorough Feasibility Study Based On Your Category

Having the desire to establish something doesn’t automatically mean it would turn out fine. The major reason why a lot of businesses fail is that there are no accompanying researches and studies done to know the areas of strength. Every business comes as a solution to a pitfall or limitation of another.

To make your bank successful in customer satisfaction, you need to understand what financial service(s) customers complain of in other banks and how you can solve this challenge in your bank. This means most of your findings would revolve around the customers.

Raise The Necessary Capital and Partners

Since you’ll be in charge of people’s funds and resources, you need to be able to convince accreditation bodies that irrespective of whether there are flops in the amount of capital generated, you can still disburse what the customers have entrusted into your hands.

Your customers are looking forward to having their money multiply in their accounts. It is now up to you to determine how this money will be used to generate more funds either through loans, investment and so on. This is why you are required to provide a huge amount of startup fines amounting to thousands and millions of dollars.

After successfully meeting up the target to begin with, you need to start scouting out for partners. Their duty is to invest in your bank and receive a percentage as return or profit. The partners who invest with you must have a well-defined financial means to avoid incrimination.

Obtain Your License From

Having done the above, you can now proceed to the Central Bank of Nigeria (CBN) for accreditation and issuing of licenses. While this process takes a stipulated time, you must ensure that you provide maximum security for the money entrusted into your hands by your customers. This will be well vetted by the licensing department of the CBN and any other regulating institution.

Get A Suitable Location For the Business

Properly siting a business is sine qua none to business success. Hence, from the early stages you must give proper consideration to where to intend to establish your bank. You might have a couple of addresses in mind to choose from. However, you must select a place that matches your business needs.

Whether the land is purchased or leased, you cannot afford to make mistakes with your choice of location. The location of your bank should be at a place that is easily accessible and safe. Customers will not patronize you if the bank is in a hidden area.

Engage in Aggressive Marketing and Advertisement

Banks experience so much competition from other banks who desire to have as many customers as possible. It is now left for you to draft out a means to reach out and inform others of the service you offer and how your services would benefit them the more compared to other banks.

This can be easily achieved through professional marketing and advertising campaigns. Your presentation of your bank services to the public will determine if they see you as one who thy can do business with or not.

Maximize tools like the Social media, Television, Radio, Newspapers and Publishing Houses to spread your information. You can also spread word on the streets and marketing centers through special campaigns that bring you closer to those who would need financial services.

Thank you for taking the time to go through this article. I hope that you learn from this and use the information contained herein to your maximum advantage. Have a pleasant day!

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