[i2pi]

De Novo charters are available, but in very limited supply. I think there have been maybe 5 new charters since the crash. Prior to 2008, 100's were issued annually.

The problem with acquiring an existing bank is that for any tech company, you are likely to be changing the business purpose of the acquired bank, so you'll need to basically go through the de novo process again.

Either way, you're looking at 5+ years to get a charter that you can use to run any new digital banking business.

And then there are the capital requirements. The capital required to launch a Bank is tremendous. You need to have sufficient capital against your projected future deposits. Way out of the range of VCs. And only a limited number of PE firms play in that space.

And even if VC's did have the financial resources, the returns are dismal. Chartered banks, particularly new charters (either de novo, or acquired for a new business purpose) are limited in their growth. A very fast growing bank might grow 50-100% yoy. The return on capital equation just doesn't work out for VC capital.

It doesn't make much sense either for PE firms, given the limitations imposed by the Bank Holding Company Act.

tl;dr, this shit be hard.

[Bricejm]

Not an issue of supply, just regulation. It's significantly more difficult to start a bank today than 5-10 years ago but not impossible. Provisions in Dodd-Frank actually insulate current banks while raising the standards to start a bank. Also - charters are issued at the state level, but not without the blessing from the Fed/FDIC.

[dragonwriter]

> De Novo charters are available, but in very limited supply.

Is it limited supply or limited demand? While I've seen some articles pointing to higher FDIC standards, I've seen others indicating that the market conditions that are historically linked to high levels of de novo applications simply haven't existed since the crash, though there are some signs conditions are edging toward them.

> Prior to 2008, 100's were issued annually.

Prior to 2008, those new banks were almost without exception chasing the then-booming real estate loan market, whose collapse was a central element of the crash. Those hundreds annually in the years just before the crash were a symptom of the bubble that was about to burst.

[i2pi]

The standards are now much higher, which may be limiting demand. It is far less attractive to apply for a new charter when your growth is curtailed and examinations are more intense and frequent for your first _seven_ years of operation.

You're right on the prior to 2008 comment, but it was indicative that any bum and their mortgage broker could get a charter. But tech companies who are (hopefully?) less shady, can't.