What is white label trading software and why the rising number of FinTech frims switch to this model?
It’s a lesson that mass-market retailers learned a generation ago: white label products sell.
Grocery stores offer store-brand versions of everything from cereal to pasta sauce for less than the bigger names, consumer electronics retailers sell customers on lower priced generic components, and even small banks are increasingly outsourcing back office functions such as check processing to white label providers.
In all cases, though, the concept is the same: take a product or service that’s been developed by one company and market it under another company’s brand name. For businesses it means they can have a ready-to-use product without investing resources in product development, and for manufacturers or developers it means a new outlet for their product with a ready-made revenue stream.
Even Software-as-a-Service (SaaS) or Infrastructure-as-a-Service products are now offered as white label. White label software allows customers to use or even resell software solutions under their own brands, building their own customer base while adjusting the look, feel, and sometimes the functionality of the product. This type of arrangement has become common in digital marketing, customer service, market research and other industries in which business-to-business (B2B) software packages are customized and rebranded for more consumer-facing audiences. Financial Services Industry is not an exception. You can get a white label trading software, white label P2P lending platform, white label trading terminals and even white label brokerage.
The benefits for brokers
Companies, considering white label software packages, usually want to:
- Start a new business with low start-up costs and dramatically shorter route to market;
- Expand the offering of an existing company;
- Optimize IT and R&D budgets.
Either way, white label software enables businesses to bring quality, scalable digital products to market quickly and easily.
White label trading software for brokers has emerged as a popular tool for building and deploying client-facing trading terminals. It enables brokers to offer their clients a software solution that doesn’t sacrifice anything in the way of features or functionality. This is critical for small and independent brokers. It gives them an opportunity to stay competitive against the major players without much of investment in software development services.
Truth is technology means a lot when it comes to winning and retaining customers. Over the last decades technology made a giant leap, and it is changing quickly every year. Mobile Devices Spreading and Cloud Technologies dictate the best practices of commercial software development now. In order to stay competitive and win new clients broker-dealers have to upgrade their trading software. And, this may be costly. The good news is that now even the smallest broker can afford to offer their clients a world-class trading experience via using white label trading software.
“Building your own trading and brokerage platform in-house has been getting increasingly more difficult and expensive over the last several years. We thought that the market needs a white label solution that would incapsulate all the common functionality of the brokerage business and provide customization tools to make each client unique.” – says Roman Zhukov, CEO of ETNA, provider of white label trading platform ETNA Trader. – “We would like to give small and medium brokers and FinTech firms the tools that have been previously only available to large brokers. That will revive the competition and boost the creation of new greater financial products and services for the millions of retail investors.”
The in-house alternative
White label trading software actually makes more sense for most brokers than in-house development, according to Drew Gainor with the Young Entrepreneurs Council. Custom software development—while seemingly an ideal solution on paper, allowing the broker to get the exact product they want for their clients—is an ill suited solution for what most of the industry players really need.
- It’s extra work: Why spend time and money reinventing the wheel when others have come before you and worked out all of the kinks?
- It’s slow: Trading Software development takes time. Polishing and fin-tuning complex trading programs can drag the process out even more. All of that delays your time to market. It also increases the possibility that you’ll miss out on critical opportunities in the market while building out your new software platform.
- It’s expensive: The costs of software development can add up quickly. Be ready that the final bill for custom solutions may be significant. It’s also wasteful. Why develop proprietary tools and solutions from the scratch when similar products already exist and work?
- It doesn’t include the specialized support you need: Any qualified software developer can build you the product that you want, but will they be around to support you a year or more down the line when you need to make adjustments or changes? And, if they aren’t experts in your industry, will they be able to recommend upgrades and additional features to maintain your leadership position? They’ll build what you ask them to, but will they know enough to design the features you don’t know you need yet?
On the other hand, a white label trading software offers a turnkey solution for brokers looking to get up and running with minimal fuss and downtime. Some of the advantages of the typical white label package include:
- Personalization: Even though its an off-the-shelf product, a good white label trading software package is easy to re-brand and customize to meet your needs. Future changes are just as easy, many white label developers are willing to make custom adjustments as users’ business needs change and evolve over time.
- It’s cheaper to deploy: Developing proprietary trading software for your brokerage is a little like ordering custom cabinets for your kitchen. They might be great, but the prefabricated cabinets from the home improvement store will get the job done just as well and for a fraction of the cost. And don’t forget that custom software requires extensive testing after it has been installed. White label software is effectively ready to go on day one with all of the pitfalls already ironed out.
- It’s hands off: Focus on your core competency. Brokers have better things to do with their time than project manage the creation of their trading software. Software implementation is what white label firms do every day. They’ve integrated white label trading software many times and know exactly what needs to be done in order to get the job done right, on time and on budget.
White label trading software allows brokers to focus on building their brands and their businesses without spending excessive time and money on software development. What’s more, white label platforms often deliver a better, more sophisticated and flexible product than custom-designed software.
Choosing a provider
Just as software developers are not all created equal, there are many choices on the market when it comes to white label offerings.
Some products are better suited to enterprise users, while others are dialed in for independent brokers. Be sure you know what you’re getting when choosing white label software or outsourcing any technology development services.
Here are 5 questions you might consider asking when choosing a provider for the white label trading software for your brokerage?
- Do they know the industry? One of the primary benefits of white label trading software is access to knowledgeable, expert developers who know the financial services industry inside and out and can tell you not only what your competitors are doing, but what you need to do to stay ahead of the curve. They can also help you better understand what customers are looking for from trading software and make sure that your firm’s implementation measures up.
- Is the product easy to customize? When choosing a white label trading software provider, you consider both the front end look as well as the administrative tools on the back end. You’ll be using them on a regular basis. How easy is the software to customize with your logo and content? How many options for personalizing this software do you have? And, perhaps most importantly, how seamlessly will it integrate with your existing systems?
- Is the user experience a positive one? You want a trading tool that you clients will be happy using. It should be seamless and intuitive for them, including everything from the account management tools to the support information.
- Costs and pricing models? Among the many advantages of white label trading software is the significant cost savings that come with off-the-shelf trading software. But are you saving enough versus developing your own custom platform? Make sure the products and services you get from your provider live up to the fees they charge for them. And shop around, as contract fees can vary from provider to provider, depending on the specific services you need.
- What kind of support is offered? No white label software contract should be considered complete without a support agreement in place. Make sure your partners will be available to help with any concerns or issues you may have with the the platform. Further, pay attention if the vendor is adding new services and features for the software.
In short, switching to white label trading software will save you resources and shorten your route to market if launching a new product. Get more while cutting your IT budget!