How to start a bank

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So, Sally, you've spent the last six months or so talking to these two women in Columbus, Ohio, who've been doing something that in today's world is kind of rare. Yeah, they have been in the process of starting a bank.
And I got to say, like, I barely knew that was something you could do. Right.
Like, where are you going to even go to get, like, big, gigantic marble columns?

What?

You're going to go to the quarry?

Where are you going to get your vault with the turny thing on the front of it?

Where do you get all your big stacks of cash to put in that vault?

Erica, I wanted to find out.

You're in the secret tunnels of the bank.

That is the bank's CEO, Ellaria Rollins.

The bank is called Fortuna, named for the Roman goddess of fortune. The two of us are standing in one of the bank's back hallways, aka secret tunnels.
Speaking of that, where is the money? Yeah, I cannot tell you where the money is. Oh, come on.
Erika, Ellaria told me they do have a vault. It's all ready to go, but it is in a secret location for security reasons because bank robberies do happen.
Ilaria has been in banking 30 years, and she has actually been through four of them. Whole other story.
But she doesn't want to show me the vault. Fair enough.
She just describes it. And alas, it does not have one of those big turny things on the front.
It's not the size that I think you would expect, but it's functional and it takes care of what we need. It's just a little vault.
It is a little vault. I visited Fortuna in late January when they were gearing up for their grand opening and ribbon cutting.
The day before that big event, I was in Alaria's office where she logged on to a meeting with the bank's leadership team. Any questions about the grand opening tomorrow? I was going to say.
They're expecting 200 people for the ribbon cutting, and they're feeling ready, though they are still putting the pieces of the bank together. That afternoon, I sat in on a meeting where Fortuna was working with an outside vendor to set up a way for people to open accounts online.
And they had to make all of these small, important decisions. Like, would overdraft protection be an option? I mean, can you confirm that, Elaria? I don't know that we've actually set anybody up with overdraft.
Yeah, let's unclick that for now. They're definitely going to have overdraft protection eventually, but it wasn't set up yet.
Ditto debit cards. They were still waiting on Visa to get that figured out.
It's a whole thing. Hearing all of this just really drives home for me just how many tiny parts make up a bank.
And like just for how every single bank in the country, at some point, someone had to figure out how to do this stuff. Like none of it is just like available out of the box.
We're truly building a bank. And, you know, not many banks start every year and, right, like three or four businesses in the country are having this kind of conversation.
Yeah. Last year, 2024, six banks started up in total.
Those numbers used to be way higher. Before the 2008 financial crisis, there were more than 100 new banks opening in the United States every year.
But for reasons we'll get into, starting a bank has gotten a lot harder. Hello and welcome to Planet Money.
I'm Erika Barris. And I'm Sally Helm.
This process took Fortuna three years, $20 million, and a lot of sleepless nights. Today on the show, we get a close-up look as they go from the idea of a bank to the first deposit.
Yeah, how do you start a bank? Why would you bother? And is there an argument to be made that more people should be doing it? This message comes from Grammarly. The work week can be fast-paced, and it's hard to focus on getting everything done.
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That's BetterHelp.com slash NPR. Like any business, a bank starts as just a twinkle in someone's eye.
And of course, that twinkle has some dollar signs attached. I mean, why does anybody start a business, right? So obviously, there's one obvious answer, which is to make some money.
That is Lisa Berger. I introduce myself usually as a born and bred buckeye from Columbus, Ohio.
Someone described Lisa to me as being a rare combination, intense, and also somehow laid back. That was definitely the vibe I got.
A while back, she started a title company and realized that she loved it. Lisa is an entrepreneur at heart.
I loved being in charge. I mean, it sounds very cliche, in charge of my own destiny, right? So I guess I'm a control freak is what I'm trying to say.
The title company is a success. She sells it and then starts looking for her next big idea.
I wanted my next project to be my legacy project, if you would. I mean, that sounds pretty grandiose.
But, you know, I wanted it to have meaning. Lisa knows a lot of people in the Columbus business world.
And she actually knew some guys who had started a bank. And they were like, Lisa, maybe you should think about that.
They said, why don't you take a look? And so I did. She started poking around, and she found that very few banks are owned by women.
Of the more than 4,000 banks in the country, only about 20 are women owned. And Lisa told us that only three of those were intentionally started by women.
The others were like a father left his bank to his daughter, that kind of thing. So I thought, wow, this is now interesting to me.
Lisa's like a girl's girl, all girls school, one of three daughters. Also, when she'd been running the title company, her own banker was a woman.
The person she worked with to manage her business accounts. The person she once called panicking when she thought she'd lost a big check.
She hadn't. That banker? Ilaria Rollins.
We met her earlier. She was the one who didn't want to show Sally the vault.
When Lisa started thinking seriously about starting her own bank, she wanted Ilaria on board. She called and said, hey, I'm thinking of doing this.
Would you consider being the CEO? Lisa explained, I want to start a woman-owned bank aimed at helping female entrepreneurs, what would eventually become Fortuna. But Lisa is the ideas person.
She needed a CEO, someone with serious banking experience. Ellaria had been in the industry for decades.
She started out opening accounts, worked her way up to top leadership positions, and she'd actually worked at a startup bank before. In the banking world, these are called de novo banks, which essentially means new in Latin.
Ellaria had loved working at a de novo. It felt less corporate.
It felt more alive. And from both a business perspective and like a meaning perspective, she thought that focusing on female entrepreneurs was a good idea.
She said men in general have more connections in the commercial banking world, like someone they could just casually text and say, hey, I'm thinking of starting a business. Can you tell me what my loan package might need to look like? Can you tell me how much you think I should ask for? But on the flip side, if you're a female starting a business, the experience probably looks a little bit more like I'm walking into a banking center.
I don't know the person across the desk from me. They may hand me a checklist of what I need to do, but I don't necessarily have someone who's going to review it with me in detail and hold my hand through the journey.
And that's the gap that we'd like to fill. Research does suggest that women starting businesses can have more trouble getting financing.
But women own a lot of businesses and also stand to inherit a lot of wealth. If you're a bank, there's an opportunity there to help people and to make money.
One lawyer I talked to who works with a lot of new banks told me that this, starting banks with a particular demographic group in mind, it's kind of a trend. And it could be part of how the future of community banking looks.
Are you guys going to be a community bank? I don't know if that's a technical term.

We will.

You will.

We will.

Okay. Is that a technical term?

I believe it represents banks with less than 100, no wait, 250 million, 1 billion in assets.

Oh, wow.

Yes.

There are various ways to define it, but community banks are generally smaller, at least as far as banks go.

The Federal Reserve actually says it's any bank with less than $10 billion in assets. And I just want to pause here for a second and talk a little bit about why community banks are important.
Because I guess before I started reporting this story, I thought of them as kind of just quaint, like probably mostly in the past, probably mostly exists in the movie It's a Wonderful Life. Maybe they have like a cute little thatched roof.
And to be fair, a lot of us never interact with any banks besides the big name institutions like Chase. $3.9 trillion in assets.
Bank of America. $3.2 trillion.
And maybe that's kind of fine if all you want is a safe place to put your money and an app that works. But these smaller community banks are actually really important for small businesses.
Giving out small loans isn't as valuable for banks. Some big banks have automated systems that can reject a loan application before it ever reaches a human.
But that won't happen at a bank like Fortuna. In our case, we will be kind of having those relationships with the clients.
We'll be listening to the story. We'll be understanding a little bit more about their plan.
And it's not just running through a computer system to see if they get approved or not. Yeah, a little local hot dog stand or new indie bookstore, they're often better off getting a loan from a small community bank.
The banker might know this business owner or be willing to work with them to strengthen their plan. That ends up meaning more loans for small businesses.
And that's important for like Columbus, Ohio overall, because those businesses can then hire people and pay taxes. So, Ilaria and Lisa decide they want to do it.
Start a community bank focused on female entrepreneurs. And in making this decision, they're joining a pretty small club.
Community banks have historically been a huge thing in the United States, but lately, not that many people are starting them. To find out why, we went to Kate Judge, professor at Columbia Law School, expert on banking.
We've had a real challenge with there being just an incredibly low number of new banks being chartered ever since the financial crisis. And people like Kate do worry about that.
The idea is banking will be healthier if there's more competition, more new ideas. Yeah, before the financial crisis in like the 1990s and 2000s, it's like banks, banks, banks, banks, banks all the time.
And then boom, 2008 goes off a cliff. Some years, literally zero.
There's been a little uptick lately, but it's still way lower than it was. And that kind of makes sense for a few reasons.

I mean, one, the economy crashed in 2008. It wasn't a great time to start any new business.
And so the Federal Reserve did something to help. They lowered interest rates, which makes it easier to get loans.
And that's good for new businesses. unless your new business is a bank.

Then low interest rates make it harder to get loans. And that's good for new businesses.
Unless your new business is a bank. Then low interest rates make it harder to get started.
Banks don't make as much money on loans if interest rates are low. And something else happened after 2008 that would make banking an even harder business.
There was a little mentality of 2008 show that banking doesn't work. The banking system is broken.
So let's create something new and let's try to start from scratch and really disrupt this old and outdated business model. Broadly, this new industry is called fintech, financial technology.
These are companies like Venmo, Cash App, companies that do bank-like things but are not banks.

The rise of these companies increases competition.

Banks have to work harder to survive.

Now, interest rates have been comparatively high in the last few years.

But in the meantime, other things have made the banking business harder.

Including another tech-related thing.

Banks just have to spend so much money these days on digital stuff. I mean, part of what you're trying to deal with is scams and people trying to hack your systems.
Right. Small banks like Fortuna have to pay third-party vendors that help them with cybersecurity.
But also with all these other basic online functions like online accounts, a mobile app. So post-2008, the business of banking got harder.
Also, regulation got a little trickier after the 2008 crisis. Kate told me that might have had some impact on whether people wanted to start banks, but it's not the main thing.
Because the fact is, regulation has always been intense, always been a barrier to starting a new bank. So let's talk about that for a minute.
Banking, of course, is highly regulated. And I think that's a good thing.
CEO Elaria Rollins. Remember, she's been in banking a long time, speaks carefully about the importance of regulation.
Banks are such an important part of the infrastructure of the economy. And so I'm appreciative of the guardrails that are put up by regulators to ensure the safety and soundness.
Entrepreneurial Lisa found it all a little more trying. They were very, I mean, it's a very particular process.
And again, somewhat boring. I mean, not the part that I enjoy.
The regulation process is extremely serious. They're not like joking around.
No, no, there's no joking. And it is long.
It starts even before you submit your application to state and federal agencies. First, you'll want to meet with the regulators.
Be like, I'm thinking of doing this. If I were to put together an application, would you by any chance be interested in reading that application? What's the vibe of the regulators? I'm hoping I'll be able to talk to some of them, but just like they are human beings and I feel like they're human beings.
You sure? I guess I couldn't be totally sure unless I actually talked to a regulator. Can you confirm that you're a flesh and blood human being? Oh, yes.
We're flesh and blood people. That's true.
Ingrid White is deputy superintendent for banks with the Ohio Department of Commerce, the Division of Financial Institutions. She's in a couple book clubs, has two big dogs.
I also like a good cheese platter and soup with cheese or anything having to do with cheese. You know, I'd be happy to eat it.
Totally. Point being, definitely human.
Ingrid told me, yeah, they first met with the Fortuna Bank organizers way back in the summer of 2022. This is kind of the first unofficial step for a new bank before any paperwork changes hands.
They reached out to us and our federal counterpart, the FDIC, to, like, discuss with us their plans for opening a bank. Ingrid's office in Ohio will eventually give a new bank their charter.
That's like a license to do business. And the FDIC, the Federal Deposit Insurance Corporation, they will eventually insure customers' deposits.
This is a cornerstone of banking. It was invented after the Great Depression.
If you put your money in a bank and that bank fails, it is insured by the government up to $250,000. That helps make it so that we all trust banks, which helps keep the economy stable.
These regulators, they want to make sure that a new bank is worthy of that FDIC logo that they'll eventually get to display. By the way, the FDIC is one of the agencies being targeted by the Trump administration for cuts.
Some employees have been fired. In any case, regulators want to see that new bank organizers are serious, experienced.
If none of them had ever been involved in a bank before, we probably would not be interested in chartering that bank because the likelihood that they're going to be successful at it is kind of low. But the Fortuna Group has banking experience.
So regulators are like, yeah, we'd like to see your application. Fortuna has finished step one.
Step two, Fortuna submits a draft application. Not the real one yet.
I mean, the application is very lengthy, maybe hundreds of pages of documentation. What's your feeling when you first get that big pack of paper? Are you like, whew, okay, this is my next couple months? Yeah, pretty much.
It includes the business plan, also the names of the organizers. They're going to have to go through background checks.
The lawyers make sure it all checks out legally. Does the bank have a plan for complying with the Bank Secrecy Act, the Community Reinvestment Act, etc., etc.? And also that they're not proposing to do something that a bank cannot be doing.
What's an example of something that that could be? So, for instance, a bank can't go out and start running a tractor company or, you know, unusual things like that. Fortuna has no tractor-based plans.
And after a couple months, they finally submit their real, real full official application. We submitted our application in February of 2023.
That's an interesting month. The very next month in March of 2023.
Alarm outside headquarters of Silicon Valley Bank in Santa Clara, California today. They just came out and told us that the bank is shut down.
SVB, the 16th largest bank in the U.S. with $175 billion in deposits, is now the biggest American bank to fail since the 2008 financial crisis.
Meltdown, right? Lisa Berger again. I was in Sarasota, Florida in my mom's condo.
I do remember, I think it was, I saw it as a banner on the TV. Elaria was watching too, and she was like, I gotta talk to Lisa.
I called her at nine o'clock at night and I said, did you read the news? And she said, I did. I said, I don't know what that does.
I don't know what that does to our plan. At this point, the bank's organizing group had already raised a couple million dollars.
Lisa herself had invested, her mom was an investor, and they'd already spent a bunch of money. If the bank didn't open, that money would be gone.
After they catch their breath, they're like, Silicon Valley Bank is really different from us. Like, hopefully this doesn't necessarily have to change anything about our business plan.
We're much smaller. We're not going to be concentrated in tech.
But also, the country's faith in banking was shaken. And that's a problem for Fortuna because they're about to have to go out to investors and do the next key step in this process.
They need to get people to believe in their business enough to hand over at least $20 million. At a time when those same investors are hearing the words

bank failure for the first time in years.

People were hearing from media that banks were failing

and that there were potentially other troubled banks.

Now the banking industry is a bad industry to invest in.

Fortuna would have to convince them otherwise. That is say good day.
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Fortuna Bank submitted their application to regulators in February of 2023. Then, the biggest bank failure in years happened.
The FDIC got extremely busy. Fortuna expected full approval within about six months.
That doesn't happen. But while they're waiting, Fortuna does start in on the last very important step in forming a bank, raising $20 million.
Like all new businesses, banks need capital to get started, to hire people, to buy dishwasher pods for the break room.

But capital is especially important. Like all new businesses, banks need capital to get started, to hire people, to buy dishwasher pods for the break room.

But capital is especially important for a bank. There are rules about how much you have to have.
And the big reason for this is safety. Like if the economy tanks and a lot of loans fail at once, the more capital you have, the easier it is for you to get through that.
And a new bank like Fortuna might also use some of that initial $20 million to make loans while they're getting things off the ground. So they start going to business people and institutions and family members saying, do you believe in our idea? Will you invest? And both Ilaria and Lisa said this was way harder and took way longer than they expected.

There were a lot of moments and a lot of sleepless nights of we're stuck at 7 million. Are we going to get anywhere? We're stuck at 10.
It might have been harder because Columbus had already had some new banks start up in recent years. Maybe people were all tapped out on that.
Maybe the Silicon Valley bank stuff did have people spooked. Also, they were trying to raise more than 50% of their money from women, which they both said made things slower.
When they made their pitch to men, Lisa said they'd be more likely to get a yes or a no right away. Women needed more time.
We would go and present and the hour-long presentation was followed by an hour of questions. Not a problem.
My pleasure to answer them. At the end of that hour, they might say, okay, this sounds interesting.
I am going to go talk it over with my husband. Or I am going to go talk to my financial advisor.
So it was a much longer, more drawn-out process than we imagined it would be. She said this did drive home to her how important the bank's mission was, educating women around business and money and investing.
They ended up having lots of conversations with business people all over Columbus, a lot of women. I talked to a local bookkeeper who ended up investing $10,000.
She'd never considered investing in a bank before, but liked Lisa and Alaria and their whole project. Fortuna's sell to investors was this.
A bank is not a unicorn tech stock. It won't have that kind of return.
But this investment would actually pay out in much the same way. What we tell our shareholders is that we expect a sale or a merger or an event to happen in 7 to 10 years.
Yeah, they might go public. That could be the event.
Then early investors could sell their shares and hopefully make money on that. Or they might sell the bank to like a larger regional bank.
And investors would get a return then from that big sale. And I was a little surprised to hear this.
You know, it maybe wouldn't feel as much like a community bank anymore. I don't know.
Is there sort of like a contradiction or a weirdness to that? A little. I think our situation is a little bit unique.
We're mission-driven, which many community banks are not. We think that there's an opportunity for a regional bank to see what we're doing and say, we like the platform that you've curated.
We would like to potentially acquire you, keep the Fortuna arm, keep it named Fortuna, keep doing what you're doing, but with more money behind us. Fortuna's pitch to investors was ultimately convincing.
In February of 2024, their application is approved by the FDIC. Ilaria said it took 17 rounds of questions, but it happened.
And in October of 2024, they finally raised the money. In December, they technically opened as far as the regulators were concerned, but very quietly.
They weren't advertising for new customers yet. They had to get their routing number from the Federal Reserve.
That took a while. They had to work out all the kinks in the system.
One of the people on the leadership team, Ashley Dick, she made their first cash deposit, $50, a gift from her grandma. It disappeared.
We lost it. We're like, where did that $50 go? Like, it's not in my online banking.
We couldn't see it anywhere. It was in the vault, but when they looked for it on the computer systems, it somehow hadn't been recorded.
Getting these systems up and running took a lot of work, but they eventually figured it all out. Everything was showing up where it needed to be.
And by late January, they were ready. About 200 people showed up at the bank for its grand opening.
Shareholders, family members, the armored car service that they contract with had sent flowers. I saw one woman walking around with what looked like a strange instrument case.
Yeah, a banjo or something random that I'm carrying. Yeah, but it is the big scissors in here that you can see, and it's got the chamber logo on it.
The big scissors for the ribbon cutting. This was L.J.
Boggs from the Columbus Chamber of Commerce. She's done this before.
Sometimes it takes a couple tries to get through the actual ribbon, so we kind of coach them like if they go in strong, hit it right at the middle, they're going to have the most success. You've got to really hold the ribbon tight.
So if somebody's kind of slacking on their end, it could take a few tries. Finally, the big moment arrived.
Ellaria and Lisa gave speeches. So did Ingrid White, the regulator.
So congratulations and good luck. And we'll be here when to regulate you and also answer questions for you and help you get going.

And then they cut the ribbon.

All right, ready?

Ready?

One, two, three, go.

Got it on the first try.

Once almost everyone had gone home, I found Ellaria and Lisa in the lobby.

They looked a little bit like bedraggled wedding guests.

They'd both taken off their heels.

Lisa was wearing the ceremonial ribbon like a sash.

I know.

This was fun.

Let's do it again.

Start another bank?

Yeah.

Why not?

But this bank was up and running.

This episode of Planet Money was produced by Emma Peasley.

It was edited by Katie Mingle. It was engineered by Sina Lofredo and fact-checked by Sierra Juarez.
Alex Goldmark is our executive producer. Special thanks to Jim Stevens.
I'm Sally Helm. I'm Erika Barris.
This is NPR. Thanks for listening.
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