Natalie Monko Lead Project Manager

    Top 6 Reasons to Build a Custom Solution Instead of Using White-Label Banking Software

    Delivering services in a highly competitive market, banking organizations are expected to process transactions in real time, ensure frequent feature releases, scale infrastructure on demand, and provide compliance with the necessary regulations.

    Now many financial institutions are integrating white-label banking solutions to meet end-user needs and generate profit. However, although white labeling allows for reducing costs and time to market in comparison with custom software engineering, it has some disadvantages that fintech companies should consider before choosing this approach. 

    At Surf, our software experts outlined the main issues associated with white-label banking software and described how to address them. But first, let’s briefly recap what white labeling strategy stands for.

    What is white-label banking software?

    White labeling is a practice when a financial services company partners with a provider of fintech software to purchase a software product to further offer it under its own brand. In fact, white-label banking refers to banking-as-as-service (BaaS), in which fintech firms can employ application programming interfaces (APIs) supplied by third parties to build their own software. 

    The main issues to consider before choosing white-label banking

    1. Customization

    When turning to a provider of white-label banking software, a financial organization has to tailor the solution to industry-specific needs, making changes to design and functionality, as well as achieving compliance with various standards. 

    Therefore, it is important to plan out the budget for implementing the required customizations before you purchase a software product. 

    With custom software engineering, on the other hand, a banking company specifies project requirements before building fintech software. As a result, you receive a software system that fully aligns with your business goals and expectations.

    2. Support and maintenance

    Delivering white-label finance software to banking institutions, it is crucial to introduce a variety of customizations in an agile manner. Vendors of white-label banking software usually offer system support to instantaneously identify bugs and errors, prevent downtime, as well as to detect security vulnerabilities. 

    However, this may be quite challenging when serving numerous corporations. It is worth remarking that some suppliers do not render the abovementioned services. There is also a risk of discontinuing offering or not refining a white-label solution.

    By hiring a reliable custom banking software development company, it is much easier to frequently release new features and make the required improvements, for example, according to end-user feedback. 

    A software engineering firm can provide you with ongoing platform support after launch to ensure a seamless user experience and eliminate the possibility of potential issues in the future.

    3. Compliance with security regulations

    Banking organizations generally operate with highly sensitive data, including personal information, biometric data, and payment details. This way, they have to ensure compliance with a range of standards such as the General Data Protection Regulation (GDPR) and Payment Services Directive 2 (PSD2). 

    For this purpose, financial institutions have to determine regulations, meet and track legal updates. Hence, fintech firms have to be able to add new security features to achieve conformance. 

    Suppliers of white-label banking software can offer adherence to basic standards only. For instance, focusing on the US legislation only, vendors may not tailor their offering to European countries, while a part of the audience could be EU residents. Furthermore, at some point, vendors may discontinue support of a white-label fintech platform. 

    When partnering with a trusted custom software engineering company, you include the list of regulations in a technical specification written before the project starts. With product support after launch, banking software developers will deliver the required customizations in a rapid manner. 

    At Surf, we put a strong emphasis on data safety and compliance, implementing functionality such as two-factor authentication, role-based data access control, data encryption, and biometrics. Our software experts also set up continuous system monitoring to instantly identify suspicious activities and potential breaches, as well as assess security risks.

    4. Integration

    The vendor offers a digital product to institutions that have different internal processes, technology stacks, middleware, data architectures, and back-office systems that may involve customer relationship management and enterprise resource planning software. In this regard, it is essential to ensure the high integrability of a fintech application. 

    When integrating a white-label banking solution, it is often challenging to address this issue. A provider of white-label finance software may have to introduce a multitude of customizations to achieve data unification and enable the seamless operation of multiple software platforms. 

    However, this process can consume a lot of time and money. Through cooperation with a fintech software development company, you will speed up software integration and reduce costs in the long-term perspective.

    5. Competition

    With a white-label fintech platform, a financial services company has to compete with organizations using the same but rebranded software. Therefore, institutions have to fight for the same audience, for example, by providing additional value or offering lower prices. 

    By making a banking software solution from scratch, you create a custom user-centric design and deliver only those features that will address the required issues, this way increasing chances for project success.

    6. Project control

    If a financial organization chooses a white-label banking approach, it typically receives a product with a pre-created design and features without the possibility to introduce changes before making a purchase. When collaborating with a custom software engineering firm, a banking institution has control over the entire development process.

    Communicating with the team, the company can validate the outcome of each project stage, making sure that everything is going according to plan. Thanks to this, you get a software solution that looks and performs as intended while containing only the necessary functionality.

    Now, let’s consider how a financial service company took advantage of building custom banking solutions instead of implementing a white labeling strategy.

    How Rosbank created a custom mobile app for businesses

    When Rosbank approached Surf, it already had a mobile app for businesses that was created on top of an outdated technology stack. As a result, there were performance issues disrupting the user experience. In addition, the interface was too complex. For example, to sign a document, a user had to perform many time-consuming actions. 

    What’s more, it was difficult to upgrade the product and introduce new features. However, since the organization had a tight budget and deadlines, Rosbank did not consider the option of making a native solution for iOS and Android

    As the company searched for the highest level of customization, it decided not to build white-label banking software. To cut down expenses and improve time to market, Rosbank aimed to launch a cross-platform mobile application instead.

    To prioritize features, software experts at Surf conducted interviews with SMEs and corporations to discover their business needs and expectations. Thanks to this approach, we developed a custom software product that fully meets industry-specific requirements and gained a competitive advantage.

    Employing the Flutter cross-platform framework, our engineers enabled stable performance. It is worth noting that the app became the worldwide second banking app made with Flutter. By following design guidelines and industry best practices, we delivered an intuitive user interface while providing smooth navigation. 

    With cross-platform technologies, our team did not have to write two separate codebases for iOS and Android, which allowed Rosbank to significantly reduce both costs and time to market.

    Mobile banking app Rosbank
    A mobile banking app created by a software development team at Surf

    Finally, we released a mobile banking application that allows users to manage multiple accounts, create documents, invoices, and payment orders, exchange currencies, and much more. Tagline, the largest Russian analytical agency, ranked the product TOP-1 among mobile apps in the banking, finance, and insurance category. 

    Wrapping it up

    White-label banking software has many advantages such as reduced expenses and time to market. However, although trusted suppliers take care of ensuring compliance with security regulations, they may focus on certain regions, missing local financial and government standards. With a white-label fintech platform, banking organizations often have to tailor the software to their needs by introducing new features and design changes. You should also take into account that the vendor may discontinue supporting a software system.

    By collaborating with a custom fintech software development company, you will receive a product that meets business-specific requirements. Avoiding competition with other firms having the same system, you will increase chances for project success. To cut expenditures and the feature release cycle, software experts can employ advanced technologies and best practices. 

    For instance, engineers at Surf use programming languages such as Swift and Kotlin that allow for writing top-notch native applications. We also specialize in cross-platform development using frameworks like Flutter, which can significantly save you costs while preserving software quality. Applying Agile methodology, our banking software developers implement new features every 2–3 weeks.

    If you want to build a custom fintech software solution, feel free to reach us via [email protected] or a contact form. We will get back to you soon and help address existing challenges.