FINMA Banking Licence Guide: Requirements, Process, and Key Considerations

The Swiss banking licence, granted by the Swiss Financial Market Supervisory Authority (FINMA), is one of the most respected financial authorisations in the world. It provides the holder with the right to accept public deposits, extend credit, and operate as a bank under the supervision of one of the globe’s most rigorous regulatory authorities. This guide examines the requirements, application process, and key considerations for obtaining a FINMA banking licence.

Overview

The legal framework for Swiss banking licences is established by the Federal Act on Banks and Savings Banks (Banking Act, BankA) and the corresponding Banking Ordinance (BankO). A banking licence is required for any entity that accepts deposits from the public on a professional basis or that solicits such deposits publicly. The licence is also required for entities that refinance themselves to a significant extent from third parties in order to finance a large number of unrelated persons or enterprises.

The banking licence is the most comprehensive financial authorisation available in Switzerland, permitting the full range of banking activities including deposit-taking, lending, securities trading, asset management, and payment services. It is distinct from the fintech licence, which permits deposit-taking without lending, and from other specialised licences under the Swiss Financial Institutions Act (FinIA).

Capital Requirements

Minimum Capital

A bank must have fully paid-up minimum capital of at least CHF 10 million. This may be in the form of share capital (for a stock corporation / Aktiengesellschaft) or endowment capital (for a cooperative or foundation structure, though these are uncommon for new bank formations).

Ongoing Capital Adequacy

Beyond the minimum capital threshold, banks must comply with Basel III capital adequacy requirements as implemented in Swiss law through the Capital Adequacy Ordinance (CAO). Key requirements include:

Common Equity Tier 1 (CET1) ratio. A minimum CET1 ratio of 4.5 per cent of risk-weighted assets, plus additional buffers.

Total capital ratio. A minimum total capital ratio of 8 per cent, plus the capital conservation buffer (2.5 per cent) and, for systemically important banks, additional surcharges.

Leverage ratio. A minimum leverage ratio requirement, calculated as Tier 1 capital divided by total exposure.

Liquidity requirements. Compliance with the Liquidity Coverage Ratio (LCR) and, for larger banks, the Net Stable Funding Ratio (NSFR).

The practical capital requirement for a new bank typically exceeds the CHF 10 million statutory minimum, as FINMA assesses whether the proposed capital base is adequate relative to the bank’s business plan, risk profile, and projected growth trajectory. Most new bank formations are capitalised at CHF 20 million or more.

Governance and Organisation

FINMA imposes detailed governance requirements on licensed banks:

Board of Directors

The board must comprise at least three members, the majority of whom must be non-executive and independent. Board members must possess the qualifications, experience, and reputation (fit and proper requirements) necessary for the proper supervision of a banking institution.

At least one board member must be resident in Switzerland, and the board as a whole must have sufficient knowledge of the Swiss financial market and regulatory environment.

Senior Management

The bank must have a senior management team (Geschäftsleitung) consisting of at least two members, both of whom must be resident in Switzerland and authorised to represent the bank. Senior management is responsible for the day-to-day operations of the bank and reports to the board of directors.

The segregation of the board of directors and senior management functions is a fundamental principle of Swiss banking governance. The same individual may not serve simultaneously as board chair and as a member of senior management.

Internal Control Framework

Banks must maintain an effective internal control system comprising:

Risk management. An independent risk management function responsible for identifying, measuring, managing, and monitoring all material risks.

Compliance. A compliance function responsible for ensuring adherence to legal and regulatory requirements, including AML obligations.

Internal audit. An internal audit function that provides independent assurance on the effectiveness of the governance, risk management, and control framework.

External Audit

Each licensed bank must appoint a FINMA-recognised audit firm to conduct annual regulatory audits. The external auditor serves a dual role in Switzerland, providing both financial statement audit services and regulatory audit services on behalf of FINMA.

Operational Requirements

Business Plan

Applicants must submit a comprehensive business plan that describes the proposed banking activities, target markets, competitive positioning, risk management approach, financial projections, and capital planning. The business plan must demonstrate that the proposed bank has a viable and sustainable business model.

IT and Operational Infrastructure

Banks must maintain IT systems and operational infrastructure that are commensurate with the nature and scale of their activities. Requirements encompass information security, business continuity planning, disaster recovery, and — for banks offering digital services — cyber security measures.

Outsourcing

Banks may outsource operational functions subject to compliance with FINMA’s outsourcing requirements. These include the requirement that outsourced functions do not impair the bank’s ability to meet its regulatory obligations, that appropriate contractual arrangements are in place, and that the bank retains effective oversight of outsourced activities.

Outsourcing of core banking functions — including risk management, compliance, and internal audit — is subject to particularly stringent conditions and must be approved by FINMA.

Anti-Money Laundering

Licensed banks are financial intermediaries under the Anti-Money Laundering Act (AMLA) and must comply with the full range of AML requirements. This includes:

• Customer due diligence and identification
• Beneficial ownership identification
• Risk-based ongoing monitoring
• Transaction monitoring and suspicious activity reporting
• Sanctions screening
• Record-keeping and documentation

Banks are directly supervised by FINMA for AML compliance purposes and are not required to join a self-regulatory organisation (SRO), unlike some other categories of financial intermediary.

Application Process

Pre-Application Phase

Informal consultation with FINMA prior to submitting a formal application is strongly recommended. Pre-application meetings allow the applicant to discuss the proposed business model, identify potential regulatory issues, and receive guidance on application requirements. FINMA does not charge for pre-application consultations.

Formal Application

The formal application comprises a comprehensive documentation package including:

• Articles of incorporation and organisational regulations
• Business plan with financial projections (typically five years)
• Governance framework and organisational chart
• CVs and fit-and-proper documentation for board members and senior management
• Capital plan and evidence of capital commitment
• Risk management framework
• Compliance programme (including AML)
• IT security concept
• Outsourcing arrangements
• External audit engagement

FINMA Review

FINMA reviews the application against the statutory and regulatory requirements. The review process typically involves:

• Assessment of the business model’s viability and risk profile
• Evaluation of the governance framework and key personnel
• Review of capital adequacy and financial projections
• Assessment of risk management, compliance, and internal control systems
• Verification of IT and operational infrastructure

FINMA may request additional information, modifications to the business plan, or changes to governance or organisational arrangements during the review process.

Decision and Conditions

Upon completion of its review, FINMA either grants or refuses the banking licence. Licences may be granted subject to conditions or restrictions that the applicant must satisfy within specified timeframes.

Timeline

The application process typically takes six to twelve months from the submission of a complete application. Complex applications — particularly those involving novel business models, cross-border operations, or significant technology components — may require longer. The pre-application phase may add an additional three to six months.

Costs

The total cost of obtaining a banking licence — including legal fees, consulting costs, FINMA fees, and the establishment of governance and operational infrastructure — is substantial. Industry estimates suggest total project costs of CHF 2 million to CHF 5 million or more, in addition to the capital required for the bank itself.

Ongoing Supervisory Requirements

Licensed banks are subject to comprehensive ongoing supervision by FINMA, which includes:

Regulatory reporting. Regular submission of financial, capital, liquidity, and risk reports to FINMA and the Swiss National Bank.

Annual regulatory audit. Conducted by the bank’s FINMA-recognised external auditor, covering both financial and regulatory compliance dimensions.

Notification obligations. The bank must notify FINMA of material changes to its business, governance, ownership, or risk profile.

Supervisory reviews. Periodic on-site reviews and thematic examinations conducted by FINMA or its audit agents.

Deposit protection. Licensed banks are members of the Swiss deposit protection scheme (esisuisse) and must contribute to the scheme in accordance with its rules.

Special Considerations for Digital Banks

The growing interest in digital banking has led several fintech companies to pursue Swiss banking licences. FINMA applies the same standards to digital banks as to traditional institutions, but the practical application of those standards is adapted to reflect the specific characteristics of technology-driven business models.

Key considerations for digital bank applicants include the adequacy of cyber security measures, the resilience of cloud-based infrastructure, the appropriateness of digital onboarding and KYC processes, and the management of technology-specific operational risks.

For a broader perspective on the evolution of digital banking in Switzerland, see our analysis of digital banking trends.

Conclusion

The FINMA banking licence is the gold standard of Swiss financial authorisation. Obtaining it requires substantial capital, rigorous governance, comprehensive compliance frameworks, and a viable business model. For institutions that meet these requirements, the licence provides access to one of the world’s most prestigious and trusted financial markets — and the regulatory credibility that accompanies Swiss banking supervision.

Donovan Vanderbilt is a contributing editor at ZUG FINANCE, the Swiss private banking and fintech intelligence publication of The Vanderbilt Portfolio AG, Zurich. He covers wealth management, institutional finance, and regulatory affairs across the Swiss financial centre.