British crowdfunding site wants to become a bank By Kylie MacLellan LONDON (Reuters) - A website which brings new sources of funding to small British businesses by allowing individuals to invest as little as 10 pounds ($16) in them, is aiming to become the first crowdfunded investment bank, its CEO said. While many crowdfunding sites have marketed themselves as an alternative to banking, BankToTheFuture.com, which has helped businesses raise 487,000 pounds since it launched in August last year, plans to apply for a banking license so it can expand its range of products to include things such as retail bonds. The site, which is liaising with the British government, regulators and the Bank of England, is being advised by Fiona Brownsell, who was involved in helping set up Metro Bank, Britain's first new high street bank in more than 100 years. "The fundamental difference about what we are doing that would be different from other people with banking licenses is transparency ... everyone can see exactly what happens with their money," former investment banker Simon Dixon, the site's co-founder and chief executive, told Reuters. As banks cut lending due to tougher capital rules and greater regulatory scrutiny, crowdfunding, which originated in the United States, has expanded rapidly as an alternative source of finance. The amount raised globally by the crowdfunding sector rose 81 percent in 2012 to $2.7 billion, according to research and advisory firm Massolution. The British government sees growth in the small business sector as important in boosting the wider economy and is keen to promote lending to small businesses and boost competition in banking. "There is a lot more support and openness to potentially new models," said Dixon. What we want to do is a lot less risky than the banking model simply because we are not going to be leveraging people's money. BankToTheFuture plans to raise 2 million pounds over the next two months, in what would be the biggest ever equity crowdfunded deal globally, to invest in both technology and the regulatory process and hopes to have its license within 3 years. "We want to take the best (investment banking) practices and strip out the worst practices and get finance to business and offer new opportunities to investors," said Dixon. Britain's Prudential Regulation Authority plans to lower the minimum capital requirement for new banks to 1 million pounds from the European minimum of 5 million pounds, in a bid to encourage more competition. New entrants have to meet a handful of other conditions though. $1 = 0.6209 British pounds Editing by Elaine Hardcastle