New entrants in the fintech and online lending areas may find it difficult and expensive to construct complex applications and software from scratch. In order to enter new markets rapidly, remain financially stable, and stay relevant in a highly competitive industry, many of today’s younger businesses rely on application outsourcing. To overcome these obstacles, businesses typically turn to white label banking app solutions, which offer the efficient and cutting-edge financing options they need to stay up with the ever-changing digital landscape.

What is White Label Banking?

Banks engage in “white label banking” when they allow outside companies access to their proprietary APIs so those companies can develop their own financial services, including Buy Now, Pay Later (BNPL). Lenders get total say over branding and customer experience, opening up opportunities for new forms of income.

White Label Banking Services:

White label financial services allow fintechs and third parties to benefit from the licensing, regulatory compliance, and technology of an established bank while maintaining a streamlined, branded front end. This tactic equips these non-banks with core capabilities that are on par with those of banks.

White label banking services include the following examples:

Point-of-sale (POS) approval:

Acceptance at the Point of Sale (POS) Short-term loan applicants at POS go through an instant onboarding process that includes a secure data evaluation before their loans are approved and accounts are set up.

Conveniently spaced out payments:

With white label banking, users can make payments quickly and easily online, without having to deal with the trouble of sending a check through the mail or finding a physical facility.

Notifications of overdue balances and payments:

Customers of BNPL have quick and simple access to their account balances and are notified in advance of payment deadlines. Customers are better protected against late penalties and missed payments as a result of these actions.

How does White Label Banking affect financial technology?

Fintech companies need robust software and hardware to provide their financial services.

Technical aspects of development, user experience design, and cyber security are handed off to the third-party developer under a white label agreement. This frees up resources, allowing the business to concentrate on other administrative and strategic projects.

These technological aspects consist of:

Platform builders create a flexible system that banks can “white label” and tailor to better reflect their own image and the products and services they offer.

Optimizing your app’s functionality from the start

There are early discussions about what kinds of loan features should be included and what kinds should be left out. Financial institutions can better accommodate their design within the expected budget and schedule limits by making these selections in advance.

Branding:

Financial institutions can tailor their offerings to a niche market by providing specialized lending solutions that aren’t offered by rival marketplaces. Lenders can reach a wider audience for their services thanks to the marketing and communication enabled by that branding.

Efforts to reduce waste:

Using preexisting application programming interfaces (APIs) is more expedient and cost-effective than developing new software from scratch. As a result, financial institutions are spending less time and energy on routine maintenance and fewer resources on brand-new software.

24/7 support:

Third-party developers generally offer lenders a round-the-clock hotline where they may report bugs, poor performance, and other technical difficulties. The system provides troubleshooting advice and, if necessary, connects users to live support.

What is the connection between BaaS and White Label Banking?

BaaS is an all-encompassing method that guarantees the prompt delivery of monetary services conducted online. To streamline lending procedures and guarantee fast, consistent supply of white-label lending services, BaaS ushers in a new, more dynamic paradigm that lays greater emphasis on API-based solutions.

Global FinTech firms rely on these mutually beneficial partnerships to take advantage of new technology, improve their customers’ experiences, and remove obstacles to further innovation. Thanks to these innovations, businesses will be able to streamline their financial operations and better manage their resources.   

Safety Precautions

Many banks still don’t take security seriously until they’ve already suffered a loss from a data breach. Despite the fact that there’s a rising understanding of the significance of proactive security measures. With the prevalence of cyber threats growing, it is imperative that financial institutions prioritize safety.

Rapidly evolving cyberthreats are a constant byproduct of ongoing cyberattacks. Resources may deplete trying to keep up with and understand expanding risks, deal with threats as they develop, and recover from incidents recognized too late.

When integrating a white label, lenders should take the following security precautions:

Biometrics

With the rise of mobile banking in recent years, clients of digital lending services have come to expect basic features like digital fingerprint scanners and facial recognition software. 

It’s challenging to imitate a customer’s unique biological characteristics. Borrowers prefer biometric authentication to entering (and remembering) lengthy passwords because of the former’s convenience and the latter’s increased security. 

Two-Factor Authentication

Two-factor authentication is a widely-used security measure that is now standard on most online services. It adds another layer of security by necessitating a second form of verification once the user has submitted their password.

Fingerprints, personal identification numbers (PINs), mobile phone numbers, and email verification codes are some examples of common secondary methods. After entering a correct password, users must then supply one of these pieces of information to verify their identities.

Protecting Against CSRF (Cross-Site Request Forgery)

Cross-site forgery can occur when someone unknowingly clicks on a malicious link or responds to a phishing request.

If hackers gain access to user IDs, passwords, and other account information, they can steal money and other valuables.  Incorporating CSRF protection into lender white-label software is one way to thwart these assaults.

White Label Banking: The Future of Digital Lending

Due to fintech’s vertical integration of the online short-term lending business, BNPL solutions have evolved. Younger businesses differentiate themselves by providing innovative technological solutions that give customers more say over their borrowing and repayment terms.

White Label banking’s flexibility and quickness will help companies outperform those who use more laborious procedures.