Creating a Blockchain-Based Crypto Banking Using A White Label Solution
I have limited resources, but I want to create my own blockchain-based crypto banking financial institution with all the features like a digital wallet, crypto-fiat conversion, crypto exchange, digital insurance, and a host of other features of any traditional bank. Is it practically possible? Blockchain crypto banking white label solution is becoming popular with fintech entrepreneurs.
Is it possible to create a blockchain-based crypto banking financial institution within the present regulatory requirements? Is it possible to have a bank without having any physical infrastructure?
Yes, it is. A Blockchain Crypto Banking White Label Solution
Let us take it as our problem statement and analyze how we can achieve this?
We shall start our discussion with the present concept of a neobank. Then we shall move to white label solutions. Once we are acquainted with a neobank and a white label solution, we will have a look at the feasibility of a crypto bank.
Of course, we will be talking at a very high level only. Practically, when we launch such a project, we might have to do some spadework, toil with the concept. It may take a couple of months, if not years to bring our concept to reality.
What is a Neobank?
A neobank is also known as an online bank, internet-only bank, virtual bank, or digital bank. It is a type of bank that operates exclusively online. It has no physical branches and offices.
The concept of a neobank is a typical technology company or a fintech to be precise, offering financial services only over the internet without having any physical offices. This fintech saves costs as compared to a traditional banking system and offers affordable financial products and transactions. Neobanks generally offer their financial services only through an app, mostly mobile-only.
The neobank does not replace a traditional bank. It rather enhances the services and facilities of a traditional bank by integrating modern technologies. They remain part of the financial system of the country, they operate and have to comply with all the regulations and statutes of the country.
Some of the features of a neobank are:
- Provision of mainly mobile services
- Close co-operation with traditional banks
- Use the latest technology extensively
- Users are expected to be technology savvy
A neobank may be regarded as an app on a mobile device to help manage a user’s finances. These applications offer various financial products like a digital wallet, insurance, payments, money transfers, and even budget planning. A user will register on the app with normal KYC etc. A traditional bank may be linked to a neobank account. The user can avail services of the traditional bank for payment transfers etc with the neobank.
Advantages and Disadvantages of a Neobank
- Skepticism to Adopt Technology for Finances
- Lower Cost
- Convenience and New Age Banking Systems
- Fast Processing Time
- Technology Component
- No Physical Representation
- Fewer Regulations
These are some of the advantages and disadvantages I could make out at first instance.
Personally, I feel, people all over the world think twice when it comes to making financial transactions on the internet. It is not easy for anyone to convince himself to do the transaction without thinking of the security. Hence, any neobank is sure to find resistance in adoption.
Coming on the cost, since there is no physical infrastructure, the cost associate with it is also not there. This cost-saving will ultimately trickle down to the customers. Neobanks will also be able to give better services at lower costs if banking operations are handled prudently.
Another advantage is the availability of various facilities and features with the tap of a button. Neobanks operate on the concept of newer technologies. They are tech-savvy. They provide the latest technology features and upgrades to their customers.
With a neobank, customers don’t have to wait for the debit/credit card to arrive by post. Neobanks allow to set up an account in a few minutes and initiate the operations right away.
Coming on the disadvantages, a customer cannot do banking operations with a neobank unless he has an internet connection, a phone, and most importantly, he should be comfortable using technology. Hence, for a layman, it might be difficult to do banking operations.
There are fewer regulations. This increases the onus of responsibilities on the bank. There are greater risks when it comes to disputes. If the neobank is not trustworthy, customers can have problems getting their funds. The neobank may charge more commissions from their customers.
Neobank completes all financial transactions online. Some customers might feel uncomfortable with this as they prefer eye-to-eye conversation with a representative in a bank.
What is a White Label Solution in a Bank?
Simply speaking, a white label banking solution is a marriage of convenience between a bank and a software company.
The software company creates banking software solutions and allows banks to use them. These solutions can be customized as per the bank’s requirements. The bank and software company will sign a contract whereby the software provider will take care of all the technical parts, operations, R&D, (in some cases even the compliance part also). The bank will be free from the technology hassles of creating its own products.
Now the next question is how do a white label banking solution, a traditional bank, and a neobank integrate into their operations?
A traditional bank shares its customer data with a neobank. A neobank may take up a white label banking solution from a software company. The neobank will hire technology from the software company and get customers from a traditional bank. The job of the neobank will be to promote high-end banking products to the customers and earn commissions and profits.
Blockchain Crypto Banking White Label Solution
Several blockchain crypto banking white label solutions are available today in the market providing E2E services. These are digital wallets, crypto exchanges, digital insurance, fiat-crypto conversion suites to name a few. These solutions can be blended with some of the traditional solutions like VISA and MasterCard debit card, retail banking solutions. Integrating all the above, we can create a crypto banking institution.
Such a crypto banking institution can provide all traditional banking solutions while supporting major cryptocurrencies. Using the fiat-crypto conversion white label solutions can give all the traditional banking products.
Benefits of White Label Crypto Banking Software Solution
White label crypto banking software solution providers can help financial institutions and crypto start-ups with the following benefits:
- Cost Reduction
By leveraging the white label banking solutions, banks can reduce the transactional cost and the need of intermediaries.
- Security
These are decentralized banking systems, working on blockchain technology. All the financial data is recorded in blocks. They provide all the intrinsic properties of blockchain technologies like immutability, trustlessness, security, etc.
- Decentralized Trust
A decentralized banking platform allows process transactions without the involvement of any central authority, eliminating counterparty risk.
- Increased Transparency
Smart contracts and blockchain technology provide greater transparency. On-chain recordings are done on the decentralized crypto banking platforms.
- Faster Transactions
Crypto banking institutions use blockchain for financial transactions and remittances from one country to another. Sending money using crypto-fiat transactions becomes cheaper and faster.
As of today, there are various white label banking solutions available in the market. Various crypto-financial institutions are using them for one or more of the following services:
- 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
I will site some of the popular blockchain crypto banking white label solution available today in the market, some of them are not crypto-oriented, but can be blended together with available blockchain technologies. These are:
Radar Payment System from Switzerland, Optherium from USA and Estonia, CurrencyCloud from the UK, Limepay from Australia, Mbanq from Germany, SatchelPay from Lithuania, Meniga from Iceland, Findity from Sweeden, Penni.io from Denmark, and Crassula from Estonia to name a few. There are others like Antier, Netcents, Velmei, PayBito, Tangany, Hashcash, Sepa, Verifo, AlphaPoint, BlockchainAppFactory, SutorBank, Espay-X, B2Broker, Wallet Factory, Payment21, Cryptocurrency Exchange, Vesto, and many more.
The Bottom Line of the Crypto-Fiat Banking Financial Institution Story
Digital currency is set to rule the financial market. It will emerge as a disruptive technology due to its potential for faster cheaper, transparent, and secure transactions. Cryptocurrency will gain significant adoption in the days to come.
Today, lots of financial institutions and start-ups are betting on blockchain. With the white label solutions on blockchain-based financial transactions, we will see more and more adoption of crypto in our daily lives.
Blockchain will do to banks what the internet did to media, and white label blockchain solutions will add fire to it. Blockchain-based white label banking solutions will integrate and blend traditional banking with cryptocurrencies. Blockchain-based crypto banking financial institutions will play a big role in the future.
Blockchain Crypto Banking White Label Solution is the future.
All this will make the blockchain more secure, promising, reliable, and the best-in-class solution for banks and other financial institutions.