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by InnReg on May 1, 2017

White Label Strategies for Fintech Startups


Should you build custom user-facing functionality in-house? Does it make more sense to leverage a white label program you can brand as your own? Or is there an optimal technology stack that integrates in-house and off-the-shelf solutions into a cohesive platform?  

Early stage fintech entrepreneurs will certainly face several build vs. buy decisions as they determine the optimal business model, operating structure, regulatory compliance strategy and technology stack for their new venture.

As an innovator in the field of emerging financial technologies it might seem counter-intuitive to even consider off-the shelf technology. Fintech by definition is designed to revolutionize the user experience and break loose from the pack. However, there are many examples of successful fintech business models where product differentiation and brand value were delivered effectively (and more efficiently) using outsourced white label programs.

Let’s examine some of the key factors to consider as you compare your build vs. buy options.

White Label – Pros

  • Faster speed-to-market. The technology has already been tested in a live environment, so you save substantial time compared to custom development.  
  • Reduced staffing costs. The technology has already been deployed. This takes the burden off your in-house developers, so you save on recruitment, training and management expenses.
  • Reduced infrastructure costs. Most SaaS products are cloud-based, so they won’t increase your operating costs or maintenance burden.

White Label – Cons

  • Loss of control. You’ll need to conform to the existing functionality, which could compromise some aspects of your product design. And you’ll need to compete for your provider’s resources with all the other platform users. An expert like InnReg can help you craft the contract, making sure you get a specific level of customization and a specific level of tech support from your provider.
  • Upfront / pre-validation costs. Some providers start charging service fees when you sign the contract, so your budget could take a hit before the program has time to earn any sales revenue. This is another area where an outsourced expert can help you negotiate scaled pricing to minimize expenses while you’re still ramping up.
  • Lack of customization. Many white label products limit customization. So it’s important to differentiate your program with additional product features or extra services beyond the core functionality you share with other subscribers.

Your Customization Sweet Spot

You’ve made the decision to buy instead of build, knowing you’ll likely need to compromise when it comes to custom features and functionality. Now it’s time to determine how to get the most from the package. Start by doing your homework. You’ll find that different white label providers offer different levels of customization at different price points. Brainstorm with your team on which features are critical to your core offering, and which features could be rolled out at a later stage. An outsourced white label expert like InnReg can facilitate this process by moderating the brainstorming session. We’ll also share our creative tricks-of-the-trade for using an off-the-shelf package with minimal negative impact on your innovative concept.  

White Label Strategies

White Label Options in the Brokerage Industry

Option 1 – High on Functionality, Low on Customization

If speed-to-market is more important than customization, then you’ll want to research a program like Interactive Brokers. This is one of several trading platforms that has created a white label program for independent investment advisors, brokers and fund investment managers. This program allows trading professionals to offer their clients all the features of a state-of-the-art trading platform under their own name, logo and brand identity. This strategy gets new brokers in-market fast. Plus they enjoy the instant credibility that’s generated when they offer their own branded technology. The platform is designed to be turnkey with only a minimal amount of technical integration. The downside is the possibility of offering a parity platform that’s identical to the competition. So it’s important to add unique services to the value proposition in order to differentiate in the marketplace.  

Option 2 – Custom Features via Plug-and-Play APIs

If customization is king, then you’ll want to work with one of a growing number of technology companies that offer individual components via an API. Two strong providers in the plug-and-play field are Tradier and DriveWealth. Both companies allow financial advisors to build a custom robo-advisor platform, by choosing the right assortment of components to support their value proposition.

Plug-and-play is a smart strategy being used by small and large companies. In fact, Lucid-Trend recently upgraded their features using a Tradier API. This integration allows them to provide their customers with advanced equity analysis and trade executions on the Lucid-Trend platform without the time and expense of custom programming.  

If you’re considering the plug-and-play option be sure your provider offers the level of customization you need to differentiate your brand from the competition. Start by identifying the key features and functionality that support your value proposition. And then make sure your plug-and-play provider offers these features off their menu, or can create them as a custom add-on at a reasonable price.

At InnReg we’ve helped several fintech startups sort through the pros-and-cons of build vs. buy for their own unique program. In each case our technology-neutral approach delivered the optimal stack to meet their needs after we considered their product, their business model, their resources, and their long-term growth strategy. We always make sure the launch platform can be scaled at peak performance levels to support growth without all new technology.   

Are you wrestling with the pros and cons of build vs. buy for your fintech startup?

Reach out today for a Complimentary Consultation.

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