We are already living in the future. In 1997, when Leeloo Dallas in The Fifth Element showed her ‘multi-pass’ to the flight attendant at the airport, it seemed impossible that only a couple of decades later similar cards would replace all the paper-based documents. The reality of the beginning of the 21st century is that a plastic card replaced passports, checkbooks, binders of personal medical history, coupons, and even money.
In 2020, even the times of a single plastic card seem to be almost obsolete! Today people can pay for things online, access their accounts from a phone, and do not even have to visit a physical bank location to set up an account – everything is done remotely. Owing to the COVID-19 pandemic and the introduced health restrictions, even more services worldwide are now available with a single click or tap on an internet-connected device: paying the bills, sending money to the dearest, donating for charities, booking a ticket, ordering delivery, and many more.
The online banking industry is thriving in 2020 and continues to evolve into even smarter and extravagant solutions. The revolution in banking is here, and it is called neobanks. This article is about what neobanks are, how they work, and which online solutions can help with boosting their development.
What Is a Neobank?
Neobank is a tech firm that offers financial services only over the internet and does not have any physical offices. Owing to the lack of physical representation, companies can save a lot on costs of traditional banking procedures, hence offering more affordable financial deals to their consumers. How to launch a neobank? Neobanks are pretty easy to launch but their main feature is the offer of financial services via a P2P payment app, mostly a mobile one.
While it might sound so, neobanks do not replace the usual banking services, they rather enhance the existing offer in the market by heavily integrating modern technological advancements. Besides differing from the traditional and union banks, the neobanks are also unlike online banks. The latter, while not having a physical representation, still remain a part of a country’s financial system and abide by the laws of their country of origin. Neobanks, in their turn, have the following features:
- Lack of connection to any state or federal bank regulations
- Provision of mainly mobile services
- Close cooperation with traditional banks
- Lack of extended credit
How Neobanks Work?
A neobank can be regarded as an app on a mobile device that helps to manage a user’s finances. It has the traditional approach of an app – a user needs to register to begin using the app. Such applications frequently offer financial educational services like budget planners. However, if a customer wants to manage its bank account and pay through the neobank with the money stored in a traditional bank, provision of additional personal data (connection of the bank account) will be essential.
From a technological perspective, it is an application that offers financial services: from small loans to savings accounts. Some providers would have signed cooperation agreements with traditional banks in order to gain access to users’ financial data and have a wider spectrum of services, such as payment and money transferring.
To lower their risks and also keep the operational costs to the minimum, neobanks tend not to offer any loans; yet, some exceptions can be found in the market, mostly in Australia where most neobanks offer even home loans.
The Pros and Cons of Neobanks
While many people use internet-based tech perks every day, there are still skeptics of the apps in general; these customers frequently do not believe in the internet and do not trust technology when it comes to their finances. This lack of trust in neobanks is completely ungrounded. Even though these are not official banks under federal or state regulations for traditional banking services, there are still regulatory bodies in every country that control and monitor the operations of such entities. For example, in the US the FDIC would need to certify the service while in Australia a neobank needs to have an ADI license issued by APRA. So the advantage number one – neobanks are secure, and frequently even more than the traditional banking offers. All you need to do is ensure that the selected neobank is licensed or certified by the respective body in your country.
Besides that, here is a list of advantages a neobank can offer:
- Low costs: most products and services in neobanks have no monthly maintenance fee and generally cost less than in traditional institutions.
- Convenience: for the tech-smart people neobanks offer all banking services within a single app + the ability to manage the finances at any time of day and night provided that the user has a smartphone with an internet connection.
- Fast processing time: there is no need to wait for the card to arrive in a week via post; neobank allows to set up an account in a few minutes and to begin using the service (loan, payment, advice) right away.
Of course, any service existing today has its downside, for neobanks it is:
- Tech component: to use a neobank a customer needs to have a phone, internet connection, and generally feel comfortable with technology.
- Fewer regulations: this leads to greater risks when it comes to disputes. If the selected neobank was not trustworthy and there is a problem, there is less governmental support in a dispute with this provider if compared to the traditional banks.
- No physical representation: yes, neobanks allow completing all financial operations online. However, if a customer prefers having an eye-to-eye conversation with a representative in a branch, this might be a downside of neobanks, even though the customer service of these applications is robust.
What Is White-Label Banking?
To define what white-label banking is, it is essential to introduce a couple more definitions.
- Open banking – a practice that allows third-parties to access the financial data of a bank. The main goal of open banking is to break the vicious circle of almost unlimited control of traditional banks over their customers. Open banking allows customers to select their financial services providers hence taking greater supervision of their own finances.
- Bank as a service (BaaS) – the system in which traditional banks open their APIs to third-parties and allow using this data to create new financial solutions to give customers a more convenient way to manage their resources.
Now that the founding concepts are clear, let’s review what white-label banking is. This new idea is clearer in the graph below.
The diagram above demonstrates that white-labeling solutions take the BaaS concept to the next level where banking service is offered by a third party company whose technology is based on someone else’s solution. The trick here is that the end-customer would generally be not aware that the app or software they are using is based on some other technology that exists in the market since it would normally be rebranded to fit the marketing strategy and the end-company.
Who Uses White–Label Financial Solutions?
Most frequently, the white-label software is used by traditional banks that do not want to (or maybe cannot) develop a decent software solution for their services. They then need to use some other company’s technology under their branding name to keep their existing clients and seem modern and up-to-date.
However, since neobanks are solemnly focused on providing financial services online, and mostly on mobile devices, they are also common users of the while-label financial products. Smaller challenger banks also purchase such solutions from fintech startups, rebrand them, and introduce them into their offer.
By default, a white-label solution developer provides full support for its software and in rarer cases might even run their software for a third party. And since white-label banking solutions are designed to facilitate the management of finances for the end-users, it means that legally these are not banking services, hence they can be used by non-banks as well.
Benefits of White-Label Banking
Customers go for white-label solutions for three reasons:
- Flexibility: Fixed and uncomfortable rules already exist with traditional banking so when it comes to the know-how options they must be better! Flexibility in this respect applies both to the services offered to the end-customers – users of the software or app – as well as companies who will be implementing the white-label solution under their brand.
- One-size-fits-all service: A white-label solution provider is offering a SaaS not a fixed product that must only fit the frame of the brand in its existing shape. A white-label solution is an idea of a service that is heavily customizable for the client; this is why the service itself basically can fit any need of a bank, neobank, challenger, or financial solution. The service here includes:
- Service rebranding
- Qualitative onboarding
- Help materials with clearly defined user journeys
- Professional tech support
- Continuing maintenance and updates whenever needed
- Customer experience: Yes, a white-label solution exists for the sole purpose of providing a better experience than the existing market offer. So a customer-centric approach with the VOC technologies is what takes such services one step ahead of the traditional financial system.
- App/software must be available for all OSs and browsers (for web solutions).
- No bugs and glitches. It must be perfect.
- Seamless integration with other services (banks, supporting systems).
Top White-Label Banking Services
The top services white-label baking solutions provide include:
- Accounts management
- Balance tracking
- Savings and checking accounts
- Deposits and withdrawals
- Virtual card issuance
- Simplified bill payments
- Insurance quotes
- Mortgages and personal loans
- Online payments and transfers
The List of 10 Best White-Label Solutions for Neobanks
The number of FinTech companies has doubled in 2020 for some regions since last year. Considering that EMEA takes a great percentage of all FinTech, our main selection of the while-label solutions for neobanks is focused on Europe’s offer and the Nordics in particular. However, in 4ire Labs, we appreciate the great solutions so a couple of options from the far ends of the planets will be present as well.
Source: Statista
World solutions
RadarPayments (Switzerland)
This is one of the biggest white-label platforms existing in the current market, and it is truly a one-size-fits-all solution. RadarPayments takes pride in working with all types of customers: clients, merchants, payment service providers, banks, neobanks, niche solutions, and anyone interested in their service. Their main offer is a fully customizable PAAS hosted by the company. The customer takes full ownership of the selected payment application and data while having no need to build and maintain the application infrastructure.
Their payment plan is also attractive since RadarPayments believes in paying for what you need, not what’s on the table. Generally, the service sounds almost too-good-to-be-true so instead of trusting the description, you can always contact their support team for further details.
Optherium (USA + Estonia)
This team has a global goal in mind – the development of a Global Finance Blockchain Infrastructure that will be available and accessible to any institution, or individual user around the world. They offer a SaaS platform that can be incorporated into any existing infrastructure and also highly customized depending on the client’s needs. The great advantage of Optherium is its care for the security of their customers’ data. Working with blockchain and AI-powered processes, they guarantee that no security breach, hacking attack, or stealing of the customers’ personal information is possible. Security and easiness of customers’ interactions with financial institutions including neobanks are the main priority for this team.
CurrencyCloud (England)
The original UK-based team knows how to operate in the UK, EU, and the US. Today their service is regulated and acknowledged in more than 180 countries allowing the implementation of their offer for a wide range of companies worldwide. CurrencyCloud is a provider of easy virtual access to the personal data, accounts, and private information of your customers; they help financial companies to manage multiple currencies worldwide (send, pay, transfer, convert, etc). If you are looking for a white-label solution to expand your offer of almost limitless currency operations, then this company is definitely worth the attention.
Limepay (Australia)
This Australian FinTech mainly focuses on merchants and making the merchant-customer financial relationship easier and more affordable. The company started as a standalone offer but today re-qualified into a white-label solution. Today complete rebranding, incorporation of their solution is possible with the company’s vision of the future. While neobanking is not their main target, LimePay can become a part of a neobanking solution that allows for easy payments from within the app for a wide range of services.
Mbanq. (Germany, USA, Croatia, Singapore)
This service is similar to RadarPayments since this is a platform that has all features, tools, and possible solutions to launch an online cloud-based bank. Besides the fully customizable platform, a partner also gets a web banking app as a bonus. A testing environment is available for free on their website; it offers a sneak peek into the possible solutions one may get and a chance to test the compatibility of your technology with Mbanq. The features of this service range from loan configuration and accounts management to secure client management and advanced reporting. This is also a one-stop solution for a bank of any size.
SatchelPay (Lithuania)
This team offers MasterCard cards; the service runs on their infrastructure and license but with your branding and required features. Its offer includes customization of the cards (embossed and non-embossed), the ability to turn on contactless payments, and adaptation of card fees to your service besides brand-matched design. SatchelPay focuses on a part of all financial services available today but their treatment and management of MasterCard cards (both physical and virtual) are flawless. Located in the heart of Lithuania, SatchelPay knows how to make your banking life much easier.
Nordic world
Meniga (Iceland)
Being over 10 years in the market, Meniga has already won the hearts of many worldwide banks, such as ING Direct, mBank, or Santander, but it continues providing its white-label solutions to neobanks and customers directly. The company has a strong stand toward green initiatives; so for a customer, it offers cashback or help-the-planet solutions, while businesses can easily inform their clients about carbon footprint and promote repayment. Meniga has a wide range of products to choose from: financial self-help for businesses and individuals (finance management assistance), aggregation of data, engagement strategies for driving customers and building loyalty, data analytics, personalized engagement strategies, and many more. The Meniga team knows its craft and has been winning FinTech awards almost every year since 2011.
Findity (Sweden)
Findity is a SaaS expense management platform for financial organizations and neobanks. One of the greatest benefits of this company is their care for the ‘paperwork’ related to local regulations. Whenever a team adopts Findity as their white-label solution and builds their own offer with it, all the legal matters get covered by the provider, regardless of the client’s country of operation. While working with every type of customer, including small neobanks and startup teams, Findity’s main focus is in the corporate world, where employers need a robust solution for accounting and payroll service. This means that this software can easily be incorporated into the day-to-day operations of any team from a small niche challenger bank to a huge corporation with thousands of employees; and in both cases, it would benefit the client and its end-customers. If you are interested in a demo, Findity offers a tour around its solution here.
Penni.io (Denmark)
Online customer journeys for insurance products are the main service of Panni.io. The company has focused on providing a superb experience for the customers and an introduction to the world of online sales for neobanks. The team is constantly enlarging and improving to guarantee a smooth transition for end-customers and an intuitive way to sell insurance online. The main offer is a service that can be branded and incorporated into any existing platform or app to drive online sales of insurance packages. There is also a perfect front-end for customers to checkout directly from the service.
Conax (Norway)
Conax is another white-label solution based on blockchain technology. The company is not focusing on a particular feature or niche financial service, instead, it offers a full infrastructure powered by AI for the new banks. Conax aims to offer superior banking services based on secure blockchain technology while also incorporating perfect UI for both neobanks and end-customers. Their solution can be fully integrated into an existing system or used to build a completely new bank. The machine learning aspect also helps with developing greater customer loyalty powered by cashbacks, targeted ads, and other reward programs.
The Bottom Line
16% of the US adult population has increased its debt in 2020 and carries it from month-to-month without changes. The number of loans issued during COVID-19 has increased as did the statistics of unpaid loans and the raising debt worldwide. This tendency clearly shows the need of consumers for financial assistance and guidance from the new solutions.
Neobanks definitely set future trends in the financial world. By making financial information, advice, and overall statistics available to every consumer within a tap on their mobile devices, these new financial institutions get closer to their end customers and provide a greater level of service than any traditional bank could ever imagine.
White-label solutions for neobanks help them reach the goal much faster. The existing software owners guarantee perfect customer service, fresh service, and convenience for the end-customer while also allowing to rebrand the software to match the bank’s marketing strategy. The market of software today is full of innovative ideas that can boost neobank’s ROI or simply offer a platform for the development of a new financial solution. If you don’t know where to start, need help with implementing a solution into your daily operations, or have a 4ire Labs case that can benefit your team, contact us to discuss the details and begin transforming your offer today!
