What is white labeling and can it benefit your firm?

From retail-friendly online applications to digital-driven processes streamlining back-office functions, fintech represents the marriage of financial services firms with leading-edge technology developments. Notably, this can help bolster top-line growth and bottom-line results.

If your financial institution is eager to explore new ways to capitalize on the benefits of fintech but uncertain on how to best proceed, one of the hottest trends in the industry—white labeling—provides a proven blueprint. But, what is white labeling exactly?

In short, it's a partnership with a fintech firm in which you integrate their advanced technology within your company's brand. The relationship allows you to enhance and expand your firm's capabilities and offerings while providing a steady income stream to your fintech partner.

White labeling: A nimble alternative

White labeling is one of three ways you can add technical innovations to your operations.

1. You may staff a full-on tech development department that builds and maintains proprietary programs and applications. While offering complete control over the systems, the investment is significant—especially because the team must fully understand regulatory concerns. Still, RegTech providers can help streamline efforts on that front.
2. You may connect with a high-profile fintech firm via a pass-through relationship. This way, your customer links to the third party's services through your company's application or webpage. Although this approach is relatively easy to implement and steers your customers to a secure platform, you give up much of the control of the user experience. As a result, you glean less data about your customers' traits and behaviors.
3. You may partner with a development firm specializing in white-label software and implementation. The firm may also work with your own software development team using flexible application programming interfaces. Such relationships provide confidence that both technical and regulatory necessities are covered while keeping all customer-related data in-house.

Ultimately, white labeling is appealing to financial services firms because it offers rapid access to an expertly developed fintech application that expands a business’s reach.

An option for your customers as well

In addition to financial services firms, a wide swath of industries view white labeling as a way for firms to expand their product offerings or deepen their service capabilities in a relatively cost-effective way.

Here are a few examples of how white labeling can help other industries.

• A niche online marketing agency may offer white-label services to a larger communications firm reluctant to create its own team.
• A tech-focused firm that doesn't want to build up a sales and marketing department may develop white-label software for clients who similarly don't wish to add a development team.
• A large consumer goods manufacturer may develop white-label products for a smaller entity that's looking to build up its regional business before it invests in a manufacturing facility.

What's the difference between white labeling and private labeling?

While they’re frequently used interchangeably, white labeling differs from private labeling in a few key ways.

• A white-label product or service may also be sold to other firms that similarly incorporate the offering.
• A private-label product or service is more customized and usually features a collaboration between the production and marketing companies.

A way to accelerate your strategy

If your firm's growth plans hinge on complementary offerings to your core business, white labeling can provide quick access to new products or services.

And because white-label producers leave the marketing and sales to your company, you'll retain all insights into your customer relationships as they benefit from the expansion of your product lines.