Revamping a core banking platform is an expensive proposition. To increase returns, banks must think out of the box and create innovative go-to-market strategies for core banking. One such possibility is for banks to market their new core banking platform as a "white label" service or utility to other financial institutions that cannot justify the expense of overhauling their own platforms.
Banks are realizing that core banking functions, such as transaction processing, no longer provides a competitive edge. Institutions that choose to outsource these functions will have the freedom to innovate to differentiate.
But, speed matters. Banks planning to move into this area will face stiff competition from other nonbanks, particularly core banking software providers. These providers could build capabilities around their core banking software to offer a robust “white label” service. Thus, first movers will have a decided advantage.