My Experience Opening UKs First Black Owned Bank
In a capitalist society, having control of your money is how you win the game, but controlling a bank is how you own the game. Everything that is built in this society is built by people with their energy, and people exchange their energy for money; those that control money control peoples’ energy, and peoples’ energy gets things done in this society.
What I’m about to share may be a confusing concept if this is the first time you are hearing this, but all money is created as debt; meaning all money that exists in society was once loaned to someone from a bank, and the person was indebted to the bank to repay it.
It’s important that you understand the correlation between banks, money and energy, because human energy is a commodity. The reason banks are the key to owning the game and not just winning it is because banks have what is know as a licence for conversion, which means they can convert human energy (a signature, a promise to pay) into money (credit).
Contrary to what the movies show you, bank vaults are not filled with money, gold and diamonds, but they are filled with paper; paper with signatures on it. In fact, there is very little bank notes circulating in society, most money exists on computer screens. Even the bank notes in your pocket aren’t even money (payment), they’re actually a promise of payment. If you have a bank note take it out and look at the top of it. In bold writing it says “I promise to pay the bearer”, so it’s not actually payment, it’s a promise of payment, and in this society a promise of payment is payment, because you can’t actually pay anybody as money doesn’t exist!
Payment requires you to exchange something of substance. Back in the day people used to exchange gold and silver for services, this was called “The Gold Standard”, but carrying around large amounts of gold and silver was not only inconvenient but also dangerous, so people would deposit their gold and silver into a bank and the bank would issue them a note letting them know how much they have in the bank… “You have 10 pounds of sterling silver in our bank, Note to cashier: please pay the bearer 10 pounds of sterling silver”. As whoever had the bank note was able to collect the gold, people just exchanged bank notes and told the payee to collect the gold. After a while nobody ever went to the bank to collect the gold, they just exchanged the notes, why bother!?
The bankers realised if no one ever checked to see if the gold was actually there, what’s stopping them from issuing notes based on nothing? This is the beginning of “Fractional Reserve Currency”, meaning only a fraction of the bank notes have gold behind them in reserve. Now sometimes the bankers get caught out if mass hysteria breaks out amongst their customers and everyone tries to withdraw their gold as there isn’t enough gold for all the notes. This still happens today with banks not having enough notes for their on-screen credit, and when everyone tries to withdraw their money at the same time this is called a “run on the bank”, this happened recently in 2007 and caused Northern Rock Bank to go out of business.
At one point the government allowed fractional reserve banking, saying for the amount of notes you have issued to the public, you have to have half the amount of gold in reserve. Then it became a quarter, then one-eighth, and it kept reducing until on September 19, 1931, when the UK came off the gold standard. Before then you could take your bank note to The Bank of England and redeem gold and silver. Now the money you have isn’t backed by any value, except the belief that it will be accepted when you go to the shops, so you can’t actually pay anyone, and now your promise to pay is as good as money.
Back to the bank vaults full of paper with signatures on them. Why signatures you ask? Because when you get a loan from the bank, the bank doesn’t have the money it will give you, it actually creates it for you there and then. It uses its licence of conversion to convert your promise to pay into computer screen credits aka money! It’s the licence for conversion that allows you to create energy to do things in this system. The bank “creates” the money and gives it to the entrepreneur, the entrepreneur creates a business and pays the employee, the employee takes their wages and spends it within a community business, and the business owner pays off their bank loan, that’s called a cycle, that’s called an economy. If the entrepreneur can’t get a bank loan, then none of this happens.
Starting businesses is important because it can redistribute wealth 6 to 8 times faster than employment. It was shown by the Department for Communities and Local Government that even though Black people have higher aspirations to start-up in business, evidence suggests that we are more likely to have our loan applications rejected and face higher interest rates than Indian and White businesses. This is the evidence that inspired me to look into opening a bank.
What is a Black Bank?
When it comes to the term “Black Bank”, we have to be very clear what is meant by that. Over the past few weeks, I have been sent “lists of Black Banks” within the UK. Firstly, some of them just look like lists of Black people who work in a white-owned bank. And secondly, some of these are foreign banks based in the UK. Just because a bank is Black Owned or from a Black country, it doesn’t make it a Black Bank; Let me explain what I mean. The bank could be a white-owned bank and be a “Black Bank”. The term “Black Bank” means a bank that supports the Black community or the Black cause. If a bank is Black owned and doing nothing to support the Black community, that is not a Black Bank. Don’t be so quick to give them your money, do your research first. Find out how many loans they make to Black people and Black Owned businesses. Find out do they sponsor or support any Black Owned businesses or causes, only then should you support them. The idea is to make your money work for you. It’s not working for you if the bank spends your money outside of your community.
Opening a UK Bank
Opening a bank in the UK is different from in America. In America, the banking regulations are a lot more relaxed and it is common for there to be many local Black owned community banks. In the UK, the creation of banks is highly regulated and it is so strict that there haven’t been any new banking licences issued in over 100+ years. So called new banks in recent years such as Virgin Money and Metro Bank are actually old banks that have gone out of business. Virgin Money is actually Northern Rock bought and rebranded as a new bank.
The two aspects of starting a bank
The first is getting the approval from the authorities. This involves a heavy amount of paperwork, including forms and a business plan that has to detail every aspect of your business, projected forecast, target markets, personnel, fraud prevention, disaster contingencies, environmental impact, and the list goes on. Within the personnel category are key personnel, meaning you need specific people in specific roles, with specific experience, and this can be an obstacle to opening the bank in a way we want it, as how many people do you know and can trust within the community that have held key positions in a bank? Another barrier is the starting deposit; you have to show a certain amount of money, usually in the millions, in order to apply. This can be overcome as we can all “promise to pay”. You also have to think about who’s network you want to use, Visa or Mastercard; each has their benefits as well as rules, regulations and applications to go along with using their service
The second aspect of opening a bank, is physically opening a bank. You have to find a specific premises to operate your bank from, and this can’t be just any old shop front, it has to be secure both physically and from things like the interception of your phone and internet. Old banks have “Legacy Systems”, meaning new technology gets added to old, but old technology clashes with new, and every so often you hear of a bank being closed for a day because their systems are down. Typically this is because the old and new fail to work together and crash, or they need to upgrade to new software. Nowadays banks look like any high street shop or the lounge in your house as the technology has become all digital. You see this with banks like Virgin Money. After you decided what banking software you will go with, you have to design it as all set ups are different based on what services you want to offer. You also have to think about card issuance, and there is new technology now that can issue bank cards while you wait.
Once you have covered those things you have to submit your plan to the banking authorities, and if they think you application is valid they will invite you for a sit-down meeting.
The Bank of Dave
Many of you may recall a program on channel 4 called “The Bank of Dave”, where Dave Fishwick from Burnley “took it to the bankers” and “opened his own bank”. But this was just a feel good programme by Channel 4, and that’s not what happened at all. What really happened was Dave who is an enthusiastic businessman, was the front man for the programme and business; opened up a shop front with a safe in it, hired a legal team to fill out all the paperwork, and they got nowhere near the authorities, they wouldn’t even take a meeting with him, so he had to resort to creating a savings and loan company, (basically lending your own money with no licence for conversion), and give it the tagline “Bank on Dave!” in quotations, which is clever wordplay to cover the fact that it’s not a bank and he wouldn’t even be allowed to call it a bank. That’s how hard it is to even get in the front door.
In 2012 I decided to try and open the UKs’ first Black Owned bank. This process took many months of research and hard work typing up documents and filling out forms. Once I found out the right authority to apply to, I spent months putting together the business plan which involved doing research into a lot of legal regulation on different areas of law as the bank falls into many jurisdictions of regulation. I found one of the hardest to be fraud prevention, and really looking at ways to tackle it, then documenting how you will prevent fraud and money laundering. This is a big issue within the industry, and writing about it requires you know how people are committing fraud, and what latest technologies are around to combat it.
During the process of putting together the business plan, I had to meet with these companies that would provide the technology to run the bank. I planned to use the latest technology which made the set up a lot easier than in previous years. The company I chose invited me up to their head offices for a meeting, it was there I realised just how complex and truly customizable banks are, you can design your bank how you want and they will put together the modular system around it. From there they invited me to have a meeting with the big bosses of the company, they flew all the way from Belgium to meet me and discuss the formation of my bank;
It was one of the most intimidating meetings of my life, I don’t know if it was the setting, the people I was meeting with, or just realising the scope of it, but I realised the magnitude in that meeting.
I also chose to have my cards issued on the Visa network rather than MasterCard. The Visa network is bigger, and because they sponsor so many large organisations it would’ve enabled me to get extra perks for card users. I took a meeting with Visa in their head office, a really nice relaxed environment, it reminded me of the offices of these new tech start-ups. Visas’ regulations were just as bad as the banking authorities, they had so much red tape it was ridiculous. The worst was how much deposit they wanted upfront. You have to pay large sums of money upfront in case there is any fraud committed on your card as Visa will reimburse victims of fraud out of your money even though it may have occurred on their network.
When it comes to card issuance, typically you get a company that specialises in issuing them. It’s a secure location and they are printed up and sent to you. But at that time a new technology came about where you could have cards issued out like a printer there and then; you find this technology in modern banks who offer you “while you wait” card replacement. The tricky issue around card production is the security of data, so they closely watch how you will set up these machines; they actually have to be bolted to the ground! Then comes the design of the card which has to be to Visas’ specification.
The final meeting I had was the most interesting to say the least, simply because of the location. Now, when I was communicating with these companies it was mostly via email, so they had no indication of who, or what I was; who would’ve expected a young Black man to be trying to set up a bank? So imagine their surprise when I turn up invited to their secret clubhouse braids and all! When I first got the invitation I did research into this club, it was one of those clubs where you had to have two previous members vouch for you, or you had to be an alumni of a certain school, or you had to be a blood relative to one of the senior members; on top of that you had to pay a ton of money yearly as membership fees. When I got the address the term “hidden in plain sight” came to mind, it was smack bang in the middle of central London, and you’ve probably walked passed it a hundred times. When I arrived it was a massive building with great architecture, open staircases with old white men framed on the walls who I didn’t recognise. Going off the hallways were many rooms filled with lots of old white men discussing who knows what?
The meeting itself was very informative, one of the guys I met with were responsible for setting up a large financial institution in this country that you’re familiar with, and told me the struggles of how they nearly went out of business due to fraud, and how he saved them from doing so; all of which was hidden from the public of course. The meeting was very informative because it really put into perspective what I was putting myself up for and what was involved.
It was that meeting that showed me we are not ready for a Black Owned bank yet. The main issue I came away with is that we need a target market, hence… My Black Market. We don’t even have a community, we just have neighbourhoods as Dr Claud Anderson put it. Taking all that I had learned throughout the process, I carefully put together the plan for My Black Market so that we can create a community, and from creating that community it would be an easy step to show the banking authorities how we are ready and able to start our own bank.
The platform we are building will allow us to organise the 5,000+ Black Owned UK businesses we have in our database, plus the rest of the businesses within our community, plus organise all the customers of those businesses, while documenting all our financial behaviour as a community, and being able to say to the authorities, we have X amount of businesses and X amount of customers who will all support the bank, not only that, we can show you data and statistics of who, what, when, where, why and how our money is used.
If you would like to be a part of helping us build the UKs’ first Black Owned Bank, then Join our Empowerment List to be the first to know when we will be realising early access to our new platform.
~ Daniel Lister, Founder of My Black Market