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A European bank and financial technology company providing cross-border payment services has received temporary authorization to organize a Stamford-based uninsured bank that an independent consultant said could benefit community financial institutions.
Banking Circle U.S. received a temporary certificate of authority from Connecticut Banking Commissioner Jorge Perez to complete the organization of an uninsured bank that will have a Connecticut banking charter.
The Luxembourg-based Banking Circle plans to establish an office in Stamford in the fourth quarter, according to the transcript of a June hearing with the Connecticut Department of Banking. The temporary certificate was issued on Aug. 10 and will expire in 18 months, unless the company applies for more time to organize the bank.
Anders la Cour, Banking Circle’s co-founder and CEO and one of the directors of the proposed U.S. bank, said during the June hearing that the company wanted to establish a state-chartered bank rather than opening a branch of its European bank.
“Financial institutions and large corporate customers often have higher regards for [a] freestanding, well-capitalized bank over a branch or a foreign bank,” La Cour said. “And Banking Circle U.S. wants to have the most robust U.S. presence.”
Banking Circle U.S. will provide domestic and cross-border payment services, including foreign exchange, and deposit accounts for U.S. banks, foreign banks and businesses involved with payments. La Cour said during the hearing that Banking Circle U.S. would deliver cost-efficient payments and banking services to financial technology service providers, including banks.
He said the company wanted to build a platform that would provide access to the world’s major currencies, creating “a financial ecosystem that cuts out the time and cost of cross-border payments.”
Banking Circle U.S. plans to have an office in walking distance from the Stamford train station, possibly in Harbor Point, and has retained a real estate broker, La Cour said. He added that the company has hired a recruitment firm and will initially have 10 to 15 full-time equivalent employees, growing to 60 employees by 2024.
“We believe the bank will provide benefits for the public and the local community in the form of increased employment and well-paid jobs, improved payment services and recognition of Connecticut as a leader in fostering improved banking services to the economy,” La Cour said.
Referencing a report submitted to the Department of Banking before the hearing, Perez asked about the strength of Banking Circle U.S.’s compliance program. Kjeld Olson, who will be CEO of the Stamford bank, said compliance was a priority for the company, adding that the bank planned to hire experienced anti-money laundering professionals.
FS Vector, an independent consulting firm hired by the Department of Banking to assess the feasibility of the proposed bank, recommended that Banking Circle U.S. hire additional personnel to handle anti-money laundering and the Bank Secrecy Act.
“[I]n our experience, technological solutions often require more human intervention and support than anticipated, particularly early after implementation when there might still be false positives or calibrations of certain systems,” Trevor Tanifum, a principal with FS Vector, said at the hearing.
David Cotney, a senior adviser with FS Vector and former commissioner of the Massachusetts Division of Banks, said community financial institutions could benefit from faster and lower-cost services that Banking Circle U.S. proposes.
“There’s been a lot, of course, written about the U.S. payments market and how it has fallen behind other parts of the world and certainly there have been efforts to address those, and Banking Circle wants to tackle several of those shortcomings in the U.S. market,” Cotney said. “Overall, in preparing the independent financial projections … we believe that they have demonstrated that the business model is both viable and meets the statutory factors in Connecticut law.”
