Financial technology (fintech) companies are coming up with innovative ways to help people and businesses manage their money. As of February 2020, there were 8,775 fintech startups in North America. Fintechs are playing an increasingly significant role in the financial world. For instance, fintechs now grant well over a third of personal loans in the U.S.
Fintechs need the right tools to deploy their services. Creating your own applications and features from the ground up can be complex, time-consuming, and expensive. White label banking (configuring and branding existing financial applications from outside suppliers) offers an alternative that can help fintechs get to market faster and save their resources. We’ll explain what white label banking is and how fintechs are using it to get ahead, so you can consider whether white label banking may be a smart move for your company.
What Is White Label Banking?
What exactly is white label banking, also known as private label banking? First, it’s helpful to understand what white label products are more broadly. White labeling is a practice that has become popular in a variety of industries.
The basic concept of private labels, or white labeling, is that one business — we’ll call it Company A — will outsource a product or service from another business — Company B — that specializes in that product or service. Company A will then put their personal touch on the product and market it as their own product. In some cases, consumers will also see Company B’s name on the product, but it will always be Company A that markets the product to consumers.
So, what does white labeling look like in the financial world? Some of the earliest forms of white label banking involved non-banking companies using banks to create branded debit or credit cards for their customers. This saved companies like department stores or airlines from having to get their own banking license or jump through all the hoops of offering financial services themselves.
Today, as Banking as a Service (BaaS) becomes increasingly popular, white label banking is allowing fintechs to offer financial services online using applications from white label suppliers. With white label banking, a fintech company can use existing application program interfaces (APIs) from a bank or a white label company as the basis for their own financial products. In other words, rather than building fintech tools from the ground up, these companies can use existing tools to put together their own branded financial product.
White Label Banking vs. BaaS
The terms white label banking and banking as a service are often used interchangeably. You may even hear them blended to form the phrase “white label banking as a service.” These terms aren’t completely synonymous, however. The subtle difference is that BaaS is aimed at deploying the financial services that companies borrow from white label suppliers. In other words, these are two pieces of the same puzzle and share the similarity of connecting banks and end consumers through helpful intermediaries.
Benefits of White Label Banking
The popularity of white label solutions in the financial world makes sense when you understand the benefits of using these solutions. There are a few reasons fintechs choose to partner with a white label banking supplier. By using APIs from a white label supplier to build your own fintech application, you can:
- Save resources: The alternative to using white label solutions is to build your own applications from the ground up. This means you need an internal team of experts who can code and develop your applications. You then must test them to work out the inevitable bugs. This requires you to invest a substantial amount of time and money into the process. You can save your resources by outsourcing this process.
- Benefit from experts: Outsourcing also gives you the benefit of knowing experts developed the applications you are using. White label apps from Hydrogen, for instance, represent the latest product research and are thoroughly tested. This means you can count on your applications to be user-friendly and to help you deploy your services in the best way possible.
- Get to market faster: Being able to skip the long, drawn-out phase of building and testing your own applications means you can get your financial product to market much faster. All you have to focus on is configuring the ready-made solutions and marketing the applications. This can also be a great way to add features to your core function without having to spend time building them all out from scratch.
White Label Banking Use Cases
White label online banking can help you deploy all sorts of helpful features to your customers. Some examples of these services include:
- Client onboarding: When new users sign up for your services, they’ll need to go through an onboarding process that asks for all the important information necessary for setting up their account. Since this is one of the first interactions a new user will have with your services, it’s vital that the onboarding process is smooth and user-friendly, so it helps you make the right first impression.
- Deposits and withdrawals: Depositing and withdrawing money is a basic component of banking that applies to many different types of fintech services. If you need a way for users to withdraw money from their accounts or deposit money into their accounts, or if you need to do this automatically, you’ll need an application designed to facilitate this process.
- Virtual card issuance: Issuing debit and credit cards is no longer a process that needs to take place in person or involve a physical card. Now, with the right integration from a white label supplier, you can issue virtual debit or credit cards to users through your website or mobile application.
- Savings and checking accounts: White label banking can also allow you to offer users the service of managing their checking and savings accounts. A popular example is micro-savings solutions, which can help users add money in small increments to a savings account that eventually builds up over time.
- Insurance quotes: If you want to provide users quotes for insurance policies, such as life insurance, you can do that with a white label banking solution. Hydrogen offers simple solutions for insurance quotes and other insurance services, like onboarding. You can easily take a user’s information and produce a quote to help them obtain an insurance policy.
- Mortgages: Whether you need a way for users to apply for a mortgage online or simply want to provide a helpful mortgage calculator so users can get an idea of their mortgage options, a white label banking solution can help you do that in a way that’s user-friendly for the client and easy to deploy for your company.
You can attempt to combine white label products from several different suppliers, but this can become a complicated process. With Hydrogen, you can integrate all the solutions you need using one API platform. This makes for a seamless experience combining all the features you need for your fintech product.
White Label Banking Examples
To understand the many possibilities of how you can use white label banking solutions, it’s helpful to look at some apps that are on the market today that were built with private label features. These apps are often referred to as challenger banks since they challenge traditional banking methods, replacing in-person interactions and brick-and-mortar branches with a virtual platform. These challenger bank apps are just a handful of examples out of many more that use white label solutions to create fintech products consumers love:
Chime: Chime is an award-winning app that offers a suite of financial management tools and services. Some highlights that may attract users to the app are that with Chime, a user can start spending their paycheck before they’ve actually received it and can avoid overdraft fees when they’re in a tight spot financially.
Digit: Digit markets itself as a savings and debt manager. The app can help users build up their savings account by automatically depositing what the user can afford into savings. They can then use this money to meet their personal financial goals and stay on top of student loan payments or other types of debt.
Monzo: Monzo is a U.K.-based challenger bank app that offers a number of features to help you organize and manage your money. You can also get a contactless debit card and a loan through Monzo. Plus, Monzo offers users perks like getting paid a day early and avoiding overdraft fees.
N26: This mobile banking app allows you to open an account quickly and manage your money in the app with personalized sub-accounts. This app also allows you to use thousands of in-network ATMs located across several countries with no fee to withdraw money. You can also use out-of-network ATMs twice a month for free.
Revolut: This U.K.-based app is now available to U.S. users. It offers a range of features to help you keep track of your spending. You can also make international transfers with no fee. The primary appeal of Revolut is that it is designed for handling many different currencies, so users can hold, exchange, receive, and send money in MXN, USD, EUR, and more.
Qapital: Qapital is a popular personal finance manager app aimed at making financial management more accessible. With tools like a spending tracker, tailored investment recommendations, and automated savings, users can start to manage their money more effectively.
The Future and Fintechs
In the past, people were used to managing their money with pen and paper, or with the help of a personal accountant. Unfortunately, people who were not as financially literate or who didn’t have the means to hire a professional were disadvantaged when it came to making the most of their finances. Today, fintechs have revolutionized the world of banking and personal money management (PFM), to make all sorts of helpful features widely accessible.
Startups continue to fill the void they see in current offerings by creating innovative solutions to help people with every aspect of their finances. White label banking is allowing many startups to bring their solutions to market in a timely manner so they can beat the competition and help their users begin benefiting from their services right away.
As new innovations continue to turn the financial world on its head and raise consumers’ expectations, white label solutions will be the foundation that allows both fintech startups and legacy companies to deploy the services consumers are looking for.
The concept of white labeling is not new, but white label banking is a relatively new innovation that is opening up endless opportunities for fintechs around the globe. Because it allows companies to get their products to market faster and benefit from tools developed by experts, white label solutions will continue to be a big part of what’s revolutionizing the banking world. As open banking spreads from the U.K. to the United States and other parts of the world, white label banking in the USA is taking on an increasingly prominent role.
White Label Features, Widgets, and Applications From Hydrogen
If you need white label solutions for your fintech, Hydrogen is here to help. We offer a suite of features, widgets, and applications that are part of our no-code platform. With ready-made white label solutions from Hydrogen, you can build in baking and savings, personal finance management, wealth management, and other components into your financial product.
You don’t need to dedicate a wealth of time and resources to building these features from scratch and testing them on the market. Instead, you can benefit from the expertise of our team. By running our own fintech apps, we’ve experienced firsthand how complicated, expensive, and time-consuming it was to build these platforms. That’s why we’re on a mission to offer white label banking services that will help digitize the world of financial systems. To start building your own white label fintech app or component, click on the button below.