White label B2B FinTech is one of the fastest-growing FinTech services in regions of the world where the use of financial products, such as Oracle Flexcube is at an all-time high. There is a growing trend amongst banks and financial institutions in developing markets to partner with B2B FinTech companies to provide white-label B2B financial services.
With the advent of the internet, the availability of data, and scientific computing, white-label technology has truly come of age. For example, white labelling has enabled software companies to provide their solutions to financial institutions on a B2B basis. White labelling allows institutions to outsource the design, maintenance, and development of software modules, thus allowing them to focus on their core competency — lending. This post will be a guide for lenders and financial institutions interested in white-labelling.
What is White Label Banking?
White label B2B FinTech is a common term used to describe cases where banks outsource part of their business processes to specialized software providers. The process followed is essentially the same as that of the software industry.
A bank would hire a third-party software provider to develop a software product that would run in their name, which would enable them to outsource non-core operations. This allows them to outsource operations such as data capturing and processing, visualization, and reporting to specialized providers.
White Label Banking Services
The various services offered by white label B2B FinTech providers can be broadly classified into the following categories:
1. Point-of-sale (POS) approval
White label providers offer software that enables banks to process approval from their customers through an app or a website in a matter of minutes. This app or website is hosted by the white label provider, and approval can be sought from customers of the bank through this channel.
For example, a customer can use the bank’s custom app to send an approval request to the bank, and the bank can then approve the request through the web interface provided by the white label provider.
2. Simplified payment instalments
While banks can offer their customers installments through their website or even over the phone, white label providers offer an alternative avenue to their customers. The white label provider offers e-commerce-like payment plans wherein the customer can opt for an installment of their choice and make the desired payment.
The white label provider then settles the installments in a seamless manner.
3. Balance and payment-due notifications
Balance and payment-due notifications are a critical part of any financial service. White label providers provide their customers with a login facility to check their balance and payment due date.
Similarly, banks can also offer balance and payment-due notifications through their own website or app. Alternatively, banks can utilize the white label provider’s web interface to send these notifications to their customers.
4. Fraud detection and prevention
Fraud detection and prevention are among the most important components of online banking. White label providers undertake a series of checks and cross-checks to ensure that the money transferred is legitimate. Multiple white label providers employ multiple fraud detection methods such as IP address verification and mobile number verification.
Banks can choose to utilize these prevention methods to reduce the risk of fraudulent transfers or to detect a fraudulent transaction and immediately notify the customer.
5. Third-party integration
A big benefit of using a white-label provider lies in the ability to integrate with third-party software. For example, white-label providers offer the capability to integrate with accounting software.
Banks can also integrate their own internal software with the white label provider’s system. For example, banks can integrate their own risk management (Flexcube) software with the white-label provider’s system to check the risk associated with each transaction.
How is White Label Banking Influencing Fintech?
Now, let’s look at the ways in which white label banking is influencing the development of fintech. Many fintech startups are leveraging white label banking solutions to build their own financial solutions.
Fintech startups realize that there is a huge demand for white label solutions and have realized that this is the best way to provide financial solutions faster.
1. Bank-specific customization
Fintech companies can build their own banks around white-label banking solutions. The first step of white label banking is to build bank-specific customization that can fit into the rest of the architecture of the white label provider.
They can then build their own app, web interface, and so on to complement the white label solution. The bank-specific customization will be the core of the bank, which the fintech company can then use to build their own bank.
2. Getting app features right the first time
Building your own app from scratch takes a lot of time and effort. It’s not easy to get every little feature right, and it’s much easier to integrate with a stable and well-maintained white label solution.
Fintech players can choose how to brand their banks. They can go for the white label branding or come up with a custom brand for their bank. This gives them a lot of flexibility to tailor the bank to their image.
4. Conserving resources
White label solutions have already been built and tested by the white label provider. This saves the fintech company a lot of resources and money. On top of that, white-label solutions are open source, which means they are readily available to be reused.
5. 24/7 support
White label solutions often employ a customer service team that will provide support to their users, both through the dashboard and through live chat. This is a particularly attractive feature for smaller banks, which don’t have the means or the demand for 24/7 customer service.
Institutions are increasingly turning to white-label technology to reduce their operational burdens by partnering with cutting-edge B2B FinTech companies. While white labeling carries a certain degree of risk and challenges, it is a novel way of supporting institutions in their lending efforts while they focus on Flexcube implementation.