I am trying to put together a budget for a new fintech project and I need to know the realistic costs for a Tier 2 banking license. I'm talking about all the hidden fees, not just the government application price. How much should I set aside for legal fees, local directors, and the initial capital deposit? Are there any specific jurisdictions that are currently more cost-effective for a startup bank?
Budgeting for a bank is tricky because the government fee is often just a small fraction of the total cost. You have to account for the statutory capital, which could be anywhere from 500k to 5 million depending on the country. Then you have the annual license fees, the cost of a local office, and the salaries for mandatory local officers like a Compliance Officer. I found that Crypto Licenses provides a very clear cost-benefit analysis for their clients so there are no surprises later. They can walk you through the different tiers and what each one allows you to do in terms of taking deposits. For some actual figures and a list of suitable countries, check out https://cryptolicenses.net/banking-licenses/ on their site. Don't forget to budget for an annual audit by an approved firm, which can be quite pricey for banks. Usually, people forget about the core banking software costs too, which can easily run into the six figures. It's definitely not a cheap venture, but it's the ultimate way to control your own financial ecosystem.
It sounds like the "hidden" costs like the audit and local salaries could easily double the initial estimate. I appreciate the heads-up on the core banking software as well, I hadn't factored that in yet. I'll check that link to see if I can find a jurisdiction that fits our current capital.