White Label: Digital banking services that boost customer loyalty

The so-called white label fintech services offer the possibility to implement financial services and strengthen customer loyalty.

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What is the White Label?

In the business world, the term “white label” refers to a product or service that is manufactured by one company and sold under the brand name of another company. In other words, one company creates a product or service and offers it to another company, which markets it under its own brand, as if it were its own product or service.

Exactly the same is true for technology services that are marketed as white label. For example, in the financial sector, a fintech company could offer technology services such as micro-savings or transactional enrichment to a bank, but under the bank’s brand image. The fintech would provide the banking services behind the scenes, but the bank would be the visible face of the service to the end customer. In this case, the technological service would be a “white label” product of the fintech.

Differences between White Label and Private Label

As mentioned above, a white label service refers to a product or service offered under the brand name of another company. The company offering the service is responsible for producing it, but the company selling it markets it under its own brand.

On the other hand, a private label service refers to a product or service that is offered under the retailer’s or seller’s own brand. The company offering the service is responsible for producing it and sells it under its own brand.

In the banking sector, a white label service is a product or service offered through an external company, but marketed under the bank’s brand.

A private label service in the banking sector refers to a banking product that is developed and offered directly by the bank under its own brand. For example, a credit card issued directly by a bank, bearing its own brand and marketed directly by the bank, would be a private label service. The bank would be responsible for producing and offering the service, and also for marketing it under its own brand.

In this case, through private labeling the company obtains greater control over the products or services it integrates. However, we must not forget that development, implementation and maintenance involve much higher costs for a bank. Not to mention the need for qualified personnel capable of carrying out all these tasks.

Ideally, each bank should evaluate the pros and cons of each product model.

Digital banking services today

Thanks to the consolidation of digital banking services, technological solutions are focused on financial inclusion and online capital management. This huge phenomenon favors both entities that decide to incorporate business models based on the availability of data and customers and users who decide to use digital banking services.

Currently these services are predisposed for the development of business solutions for companies seeking to offer their own financial services to their customers. Due to third party providers, the intervention of application programming interfaces or APIs (as we have mentioned in other posts) companies gain access to customizable banking interfaces and platforms.

Of course, this phenomenon depends to a large extent on the adoption by users of the applications and payment platforms available for financial management. In this regard, the World Bank’s The Global Findex Database 2021 report highlights that their use has increased by 50% since 2011, and today reaches 76% of the adult population.

Digital finance offers instruments for economic growth in developing countries. This means an increase in the percentage of the population that can access more favorable conditions of bankarization and availability of financial products. At the same time, fintechs are fundamental agents for the articulation of the new paradigm based on digital services for banking.

One of the latest advances in the development of digital banking is the ability of companies to adopt their own digital solutions for banking their customers.

How do they achieve this digital solutions?

Through a type of API considered “white label”, a customizable service whose purpose is just that: to provide the necessary structure for customer banking.

2 real examples of White Label service in banking

Hucha Santander App

Santander Piggy Bank

In this case, Banco Santander hired the services of a fintech like Coinscrap Finance to develop and implement a microservice. The fintech has an Artificial Intelligence technology that is able to analyze transactional data based on behavioral economics. In this way, Santander contacted them to provide the microsavings technology that would be included in its future Santander Piggy Bank. Thus, all the technological and visual development, implementation and maintenance will be carried out by the fintech, but always under the brand image of Banco Santander.

EVO Smart Piggy Bank

EVO Banco also joined the “bandwagon” of white label services with its EVO Piggy Bank. Similar to the previous case, the EVO Piggy Bank is not only a hyper-personalized service offered to the bank, but the savings app itself is customizable by the end user. The customer can set savings goals, investment objectives, personal plans and other tools.

White Label to build loyalty among digital banking users

White label applications and solutions use API technology to develop interfaces for financial services that can be offered to customers – loans, savings mechanisms, payment methods, etc. -. These applications leverage customer data and information, collected from their pre-authorized online trading activity, to optimize processes and simplify management.

As a result, the company’s customers get an app from the bank itself. However, this app is developed by a fintech that has the necessary IT infrastructure to offer these white-label products and services. This type of “ready-made” solutions are customized according to the characteristics of the company, and allow:

  • Make transfers, instant payments and automatic debits.
  • Apply for financial products and services (credits, loans, etc.).
  • Maintain efficient activity management and obtain performance reports.

Features and benefits of implementing White Label digital solutions

This type of white label solutions is essential to strengthen customer loyalty with the organization and integrate the company’s operations to the new financial paradigm. 

These are some of the benefits of its implementation:

Process optimization

For a company or business, the development of financial services represents a significant improvement in the performance of operations. In addition, it represents a reduction in the costs associated with management, since it is not necessary to maintain a dedicated management team, spend on maintenance, nor does it require a major investment.

Does it improve sales? Maybe it does

These types of digital solutions ensure better performance of the commercial activity and enable a closer relationship with customers. A catalog of services dedicated to revenue management can be developed: payments, withdrawals, collections and additional benefits for their use. In addition, this type of solution allows the portfolio to be expanded to include financial products such as consumer credit, cards and loans.

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Customer loyalty

By establishing a business model that includes financial solutions for savings, credit and deferred payment alternatives, customer loyalty is enhanced. White label’s best-performing solutions offer all kinds of features dedicated to leveraging customer profiles to offer personalized services. This is a benefit of simply using proprietary applications and platforms.

Customer segmentation and profiling

One of the most obvious benefits of implementing white label digital solutions is the deployment of a system that enables audience segmentation and much more accurate customer profiling. With this, API-based solutions feed back on their use and progressively improve the performance of the services offered. 

The greater the amount of information, the better the quality of segmentation and personalization.

The so-called white label fintech services represent a qualitative leap in the management of financial services. They make it possible to strengthen customer loyalty by offering them digital solutions that guarantee the performance of day-to-day operations.

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