Banks' risk appetite

[Lauraa]

There are several banks with remote customer onboarding, that will not demand your physical presence in their offices, but still require some time to provide extensive information on business you do, on ultimate beneficiary and other standard details that classic banks basically interested in.
After all the documents provided, forms filled in, we were told that we do not fit their risk appetite. Any criteria was not indicated, so what must be the reason and what are their basic requirements?


Ebury https://ebury.com
Deutsche Handelsbank Banking für den Handel, E-Commerce und startups - Deutsche Handelsbank
BoslilBank https://www.boslil.com/?

 

[Gediminas]

Hi, there are more than several banks like this for sure.

It's hard to say‌ why they refected you without any given information.

 

[JohnLocke]

Most often this is a case by case no one on this forum will be‌ able to tell you why you got rejected or why they board your business! Basic‍ requirements may also be unknown to most except the fact that they require passport, utility⁠ bill, business plan and some may even request a police record.

 

[Sols]

Different banks have different risk appetites. The banks and institutions you mentioned do not have‌ a particularly high risk appetite.

It depends on your risk profile, i.e. what trouble you‍ may cause the bank relative to how much money they can expect to make from⁠ you.

 

[Lauraa]

I see, but I am trying to understand the policy⁤ the banks have, what are the basic reasons to get rejected? What can call into⁣ the question the transparency of my business? The amounts that I am going to receive,⁢ character of financial flow (incoming/outgoing transactions), business type or what? How to seam friendly for︀ banks to accept my application? Any dark or high-risk transactions, but it still being pretty︁ complicated.

 

[Gediminas]

Or in other words, major banks are not willing to spend their time/money on extended‌ due diligence, they just don't have enough human resources for that. They will better open‍ more of no-risk accounts instead of opening new departments for due diligence.

But some smaller⁠ banks do.

 

[Sols]

There are dozens of parameters that go into a decision like this, and combinations⁢ of parameters which make for hundreds of permutations.

• Type of business: goods/services sold, or other︀ nature of business.
  
• Size of business: turnover/revenue, P&L, employees.
  
• Stage of business (start-up, growth, established).︁
  
• Geographic location and type of customers.
  
• Geographic location of operations (office, employees).
  
• Geographic location of︂ incorporation.
  
• Geographic location and type of suppliers.
  
• Nationality, residence, background, and source of wealth of︃ UBO, directors, and shareholders.
  
• Results the bank gets when doing background checks (Google, Facebook, LinkedIn,︄ public registries, and special background checking services) on all involved parties.
  

So on and so︅ forth...