Atom has been granted its banking licence by the Bank of England, ahead of its planned launch later this year.
The branch-free bank is developing a range of personal and business banking products and services that will be delivered online and through mobile apps.
The bank raised £25m last year, led by a major investment from Neil Woodford.
Atom chief executive Mark Mullen says: “This is a wonderful vote of confidence in Atom. Atom will offer a quality of digital experience without parallel in this sector or in many others. Our team reflects this.
“Between us we’ve built and run some of the most highly respected banks in the UK, brought ground-breaking innovation to manufacturing and service businesses, and created great software with a worldwide reach. Now all of this is being poured into building Atom so that customers will have a bank in their pocket that is ready whenever and wherever they need it.”
Mullen was previously chief executive of telephone and online bank First Direct, while Atom chairman Anthony Thomson is the former founder and chairman of Metro Bank.
Thomson says: “It’s a testament to the talent and the dedication of our extraordinary team and to the support and vision of our investors.
“It’s also a positive endorsement of our business plan and model from the Prudential Regulation Authority and the FCA. We now have the mandate that only comes with a banking licence – to change banking permanently for the better.”
Durham-based Atom has 100 permanent and contract staff and is set to employ another 60 before the end of the year.