White Label Monetization for Financial Apps and Start-Ups

The sheer number of emerging technology start-ups is staggering, and even in the face of the worst financial crisis since the Great Depression, the pace of innovation is showing no sign of slowing. There are scores of young companies within the financial technology space alone. Many of these provide substantially overlapping services while seeking to distinguish themselves through easy-of-use, unique features, or corresponding iPhone and social networking applications. But given the intensity of competition, and the growing pressure not only to grow user numbers, but to generate meaningful cash flow, start-ups will have to be highly innovative when crafting a sustainable business model.

White labeling has long been an effective business model in the software industry and has taken on particular significance in the era of Software-as-a-Service (SaaS). As a form of licensing it offers a reliable stream of revenue for developers, and for customers it offers faster time-to-market, relief from the burden of maintenance and upgrades, and a lower total cost of ownership (versus in-house development). For financial technology start-ups white labeling is particularly attractive given the increasingly crowded field, and given that there is a race to social media within the financial services industry which will only accelerate as economic recovery takes hold.

To date, two companies have already adopted this model. Wesabe, an online personal financial management site, is white-labeling its platform, Springboard, to banks and credit unions, and it has signed on at least one customer, Delta Community Credit Union. CreditKarma, which provides consumers with free access to credit scores along with exclusive offers and deals, announced at Finovate2009 that it would be white-labeling its service as well.