What is a white label trading software and why the rising number of online broker-dealers and wealth management firms switch to this model?

white label trading software

It’s a lesson that mass-market retailers learned a generation ago: white label products sell.

Grocery stores offer store-branded 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 service providers.

In all cases, though, the concept is the same: take a product or service that has 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 labels.  Add a logo, adjust the look and feel and maybe some functions, and here is a ready-made solution to build an audience and market your product or service. 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 authentic look. FinTech is not an exception. You can get a white label trading software, white label P2P lending platform, white label trading terminals, white label digital advisor and even white label brokerage.

The benefits of using white label trading platform

Companies, considering white label software packages, usually want to:

  1. Quickly start a new WealthTech business with minimal upfront costs
  2. Compliment an existing business with digital wealth management offering
  3. Optimize IT and R&D budgets and stay competitive in a digital transformation paradigm

Either way, white label software enables businesses to bring reliability, quality, scalability and efficient operations.

White label trading software for online broker-dealers has emerged as a popular tool for client-facing trading terminals. It enables broker-dealers and FinTech companies 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 mid-size WealthTech firms and broker-dealers. Firms of smaller size can’t afford having an extensive team of developers with various skills on a payroll. White label software vendors give them an opportunity to stay competitive against the major players and invest more in customer acquisition, customer service and product development. 

Mobile Trading Terminal

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 cloud technologies dictate the best practices of commercial software development now. In order to stay competitive and win new clients, broker-dealers have to become tech companies and watch their trading software up to date. This may be costly and very time consuming for a non-expert. The good news is that even early stage FinTech startups can afford to offer their clients a world-class trading experience via using white label trading software.

“Building your own trading and brokerage technology in-house has been increasingly more difficult and expensive over the last several years.  Maintaining it and keeping up-to-date is even more resource consuming task. ETNA’s white label software solutions  provide versatile, customizable and scalable solutions for digital wealth management firms and online broker-dealers.” – says Roman Zhukov, CEO of ETNA, provider of white label trading platform ETNA Trader. – “We give startups and small businesses tech tools that have been previously only available to larger firms. That boosts the creation of innovative financial products and services for the millions of people around the world.”

The in-house alternative

White label trading software makes more sense for most brokers than in-house development, according to Drew Gainor with the Young Entrepreneurs Council. Custom-tailored software—while seemingly an ideal solution on paper, allowing the broker to get the exact product they want for their clients—is a time and resource consuming solution on practice. Most of the players in the market can’t afford building software from scratch, and it doesn’t make sense in a highly standardized and regulated industry like FinTech nowadays.

The major cons are:

  • Extra work: Why spend time and money reinventing the wheel when others have created similar working technology and worked out all of the kinks for you? Focus on what really differentiate you from the competition.
  • Time to Market:  software development takes time, stock trading software takes even more time. Polishing and fine-tuning complex trading programs can drag the process out even more. All of that delays is time to market. Chances are that you may miss out on critical opportunities in the market while building out your new shiny piece of software.
  • Costs: costs of software development add up quickly. Be ready that the final bill for building custom solutions and maintaining them afterwards is going to be significant. 
  • Cost of support: 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 changes or migrate to another solution? And, if they are not 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. Things like custom design themes and other languages support great tools to stand out. Tech vendors are also willing to make custom adjustments for users.  Business needs change and evolve all the time.
  • Security. Tech vendors invest a lot in making their tech secure and usually have better access to qualified resources. Deploying new features across various business scenarios inevitably leads to a better quality and reliability of the platform. 
  • 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.
  • Focus on core competency: digital wealth management firms have better things to do with their time than project manage the creation of the trading software. Enterprise software developers, on the contrary, is in the business of professional software making. They use best tools, practices and processes. 

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 vendor

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 trade options, while others are tailored for trading futures. Some white label trading platforms are focused on foreign investors, while others serve U.S. investors only. Be sure you know what you’re getting when choosing white label software or outsourcing any technology development services. Ask questions.

Here are 5 questions you might consider asking when choosing a provider for the white label trading software for your brokerage?

  • How long have you been developing software for capital markets? One of the primary benefits of white label trading software is access to knowledgeable, expert developers who know the financial services industry inside. Experts can advise on what needs to be done to stay ahead of the competition and what are industry standards. 
  • Is the product customizable? When choosing a white label trading software provider, you consider both the frontend look as well as the back office tools. How easy is it to integrate 3rd party tools and additional content? How configurable the platform is?
  • Costs and pricing models? Among the many advantages of white label trading software are cost savings that come with an off-the-shelf solution. 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. Think of both near and far future. As your business grows, will the fees be sustainable? Shop around, as contract fees can vary from provider to provider, depending on specific services you need.
  • What kind of support is offered? Are software updates included?Software maintenance costs can be significant, looks for platforms where support is included. Make sure your partners are available to help with questions or issues. Another point is how fast are new releases deployed. Stock trading platform market changes quickly, it’s important to keep up and change quickly as well.

Whether switching to white label trading software from a proprietary platform  or shopping for a technology for a startup, using white label trading software is definitely a good strategy. It will save investors money, give access to better tech from day one and overall will shorten your route to market.  

ETNA has been developing white label trading software since 2002 and has become an expert in areas like trading, market connectivity, online wealth management, digital onboarding, broker back office and compliance, trade execution and market data. Schedule a free consultation with one of our experts to see how we can help you prosper and grow.