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A feasibility study is critical to the planning and preparation required for starting a bank. It is also useful in determining methods for significant expansion. Its primary objective is to assess the economic viability of the proposed business.
The feasibility study should answer the question: "Does the idea make economic sense?" The study should provide a detailed analysis of the business opportunity, including a look at all of the possible barriers that may stand in the way of a bank's success. The results of the feasibility study will indicate whether or not to proceed with the de novo bank proposal. If the results of the feasibility study are positive, the de novo bank can proceed with developing a business plan.
An important consideration in developing your business plan is understanding the competition your bank will face. To facilitate gathering competitive information, it may be useful to identify your competition before announcing your intentions to enter the market. You may find that it is easier to get information from market competitors if you have not yet announced your intentions. Your defined market may include an entire metropolitan area or a small section in an urban area. Proceed by gathering data on all depository institution competitors (i.e., local banks, thrifts, and credit unions). Gather information on their products and services and determine who the "low-cost providers" are and what other niches competitors are pursuing. Free brochures and pamphlets are useful sources of information on your competition. To assist you in pricing your products, you should develop a spreadsheet comparative analysis of your competitors' loan and deposit services, along with fees charged or yields by competitor. Finally, in today's competitive market, you will need to be more familiar with current technology, so consider the impact of social media and the growth in mobile banking.
Reference the Census Data link on the FDIC Call Report site for gathering financial information on competitors.