A. Gostatuto g. 40-1, Vilnius, LT03163, Lithuania
FinTech start-ups that want to enter the market with new aps and online services face a big struggle of lengthy license obtaining process at the beginning of their existence.
At this point white label banking and License as a Service models (LaaS) enter the scene: specialized software developers and providers sell their service to other providers, who then put their own brand name on it. As simple as that! In terms of benefits, both sides are better off. The developer of the software takes advantage of the new sales potential and gains an opportunity to at least partially compensate the development and operating costs. The side purchasing the service can start operating immediately and put all efforts and dedication on the core business, without the need to throw major investments on product development.
White label service providers, like the solarisBank and Wirecard, already have a banking license and can support the industry’s newcomers with reliable operational management and technical infrastructure.
For instance, solarisBank fully specializes in white label banking and exhibits an exciting business model. The Berlin-based start-up attracted vast investments from the financial sphere and had a total funding amount of more than 95 million euros.
With its white label banking service, solarisBank took advantage of a business model that has been previously practiced in the banking world in a more simplified form. To be more specific, financial institutions had an experience with using intermediaries that took care of customer service and sales, while they could focus on the essential banking competencies, issues of infrastructure and process management.
Today, however, PSD2 facilitates both, the opening and the digitalisation of the financial market. More and more providers are appearing on the market and provide innovative aps and digital services without possessing a banking license. Even online retail platforms, such as Zalando, work on developing their own payment solutions to improve the customer experience. This makes white label solutions not only a useful tool for FinTechs, but a promising business model within the banking world.