There were different triggers for me to discuss the question of whether you should buy or build your embedded finance frontend, but the one that I can share publicly is the announcement of US embedded banking provider Unit, who has launched their white-label banking frontend. Everything that follows is not directly linked to the Unit announcement.
Thanks to such a product offering, companies like Unit cannot only offer their customers the APIs and regulatory framework to build financial products but also give them the frontend product. If you look at the whole market, you will find embedded banking or BaaS providers that offer:
a) Zero or close to zero frontend (i.e. just widgets for certain regulatory-sensitive elements)
b) A basic frontend where you will need to invest additional resources in to tweak
c) A full-fledged frontend product that even includes customization and necessary adjustments.
Additionally, you can find companies that offer only the frontend and partner with different infrastructure providers for the BaaS piece.
But what’s the right path? Depending on whom you ask, you will get very different answers, and in some cases, you will end up in philosophical debates (trust me, I have been there). There are many things to take into consideration but in short:
- Pro white-label: Faster product launch; many banking features are always the same; companies might not have knowledge or staff to build this themselves
- Con white-label: Every use-case is different; if you don’t own your frontend, how will you differentiate or achieve 1+1=3? (read the Coop story above for context)
The people who are against using white-label solutions would often say that if you don’t have the knowledge or staff to build the necessary frontend, should you even enter this market? If you had asked me a couple of years ago, I would have probably said something along those lines. But my opinion has shifted and I believe there are situations when non-financial brands could go with a white-label product.
For example, if you have unique access to a certain target group and want to offer them a standard banking product under your own brand, why not start with a white-label product? There might be a point in time for such a company where you would want to own your frontend, but maybe not right at the start? Additionally, thanks to the growing speed of development in embedded finance, we are seeing more and more cases where this is being used outside of the traditional areas. For example, I have heard of a case where a large company has partnered with a BaaS provider and is using a white-label banking product to provide their thousands of partners with an internal solution for complex payment flows. These are just two examples, but in a world where speed matters more than many other things, why not use a white-label product to get to the next stage?
If you are a non-financial brand, how do you think about owning your frontend? And feel free to get in touch if you are looking for a provider that can help you with that.
