Mobile Banking Apps: Inhouse vs white labeling | Sandstone Technology

Mobile Banking Apps: Inhouse vs white labelling


Today, most Tier 1 banks develop their mobile banking apps inhouse. For other financial institutions, the path is not so clear. Should they custom build inhouse, maintaining absolute control, or lean on the experience of an external vendor and their white-label solution?

To get some perspective on the pros and cons of each option, we interviewed Sandstone Technology’s Abhish Saha, Executive General Manager, Digital Banking & Elevate and Ranjan Kumar, Director of Product Management, Digital Banking.

So why do tier two and three banks build inhouse?

 According to Saha, one of the biggest reasons a smaller FI might develop their mobile banking app inhouse is to be in full control of their User Experience (UX) and in effect take control of their own destiny. Many are new to technology or new to a highly regulated industry such as banking, and the perception may be that they can simply build an app similar to a Tier 1 competitor in their market.

“We’ve seen banks which have been through the exercise of inhouse building for anywhere up to five years, before deciding the cost and degree of difficulty are too prohibitive,” Saha says. Or they might invest millions trying to do it themselves but discover they can’t find the expertise they need in market as there is increased competition for talent with deep domain knowledge.

Another reason is they want to maintain control – to partner with a financial technology provider like Sandstone means you will have to relinquish some control. But financial institutions must realise that full control comes with a lot of pitfalls, many of which are often not planned for.

Consider your squad (Resourcing & Talent)

 According to Saha and Kumar, developing a mobile banking app requires far greater resourcing and skillsets than a UX Designer and a couple of developers: it’s at least a couple of technical squads. “And that’s the bare minimum to stay in the game,” Saha says.

That commitment is not something most tier 2 or 3 financial institutions can typically absorb easily within their budgets. And even when your squads are in place, there’s so much more to consider than just creating a great user experience. As you modify your digital banking platform and add new products, the following foundations keep moving from the position you had at day 1:

  1. – adapting to changes in security trends and new vulnerabilities
  2. – catering to the unending pipeline of new devices
  3. – and let’s not forget constant changes in operating systems and browser versions

Coupling the above with regulatory compliance, card scheme changes, industry trends and the original resource profiles, the related costs start to spiral.

That’s when a white-label proposition starts to look like a much better return on investment. Your technology partner does the hard work for you, and your solution inherits the benefit of ongoing functionality and experience uplift, whilst keeping your maintenance and compliance costs down. Imagine sharing the cost of device, browser, OS, security and industry compliance with other FIs across the globe.

Inhouse or not comes down to strategy and risk

 Before making any decisions about whether to build an app inhouse, a financial institution needs to have a defined strategy, according to Kumar. And that involves asking important questions like whether you want to focus on your core capabilities, i.e., what you’re doing today, or whether you want to achieve growth, and will your systems have the capability to support that if you bring it inhouse?

Banks must be clear about how they want to compete, and which demographics they want to target. Or as Saha puts it, “are you defending your position, are you taking a follower approach, or do you want to be at the front of the pack?”

If you do position yourself at the front, you have to consider the risks attached to that because your consumer base might not be ready for your concept. Understanding the direction you want to go is especially important in the case of tier 2 and 3 banks, whose overall architecture and design must punch above their weight as they support their strategy into the future.

Read the full article here:

About Sandstone Technology

For more than 25 years Sandstone Technology has been innovating and evolving financial solutions for some of Australia and the world’s largest banks and financial institutions. From digital banking and digital onboarding to loan origination and AI-based data analysis, our scalable, robust, end-to-end solutions using a multi-channel approach helps our customers get to market faster.

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