White-labeling gains momentum

Global correspondent banks are increasingly developing propositions for in-sourcing, says Dianne Challenor, financial institutions cash management product head for Citigroup in Asia.
An increasing emphasis on profitability is driving banks in Asia-Pacific to look for new ways to increase revenues whilst decreasing or maintaining the same level of expenses. White-labeling is an option banks are considering to help them decrease expenses and grow revenues through providing leading edge products and services to their customers.

The discussion on white-labeling is one of the factors driving the trend towards a new relationship model. The correspondent banking model is losing its attractiveness due to the cost of managing multiple relationships and the lack of real benefits for both sides. Banks increasingly want long-term partnerships with their correspondent banks where they gain more from the relationship than just the lowest price. On the other hand, correspondent banks want to expand their relationships with their customers from just a provider of transactional services to a provider of solutions - new products and services.

White-labeling is returning the industry to the old argument of outsource versus in-source. Should banks focus on their key strengths and outsource their non-core business to a provider that has the scale and capital to sustain products and services in the long term? For example, can a local bank afford to invest millions in developing an internet banking platform or should they partner with a global correspondent bank that has the scale and capital to invest over the long term and more importantly continue to invest to keep up with the ever changing needs of the marketplace?

We are increasingly seeing global correspondent banks, with the scale and investment appetite, develop propositions for in-sourcing; creating greater economies of scale and cementing long term relationships with their bank clients.

The benefit of white labeling for the client bank is it allows them in turn to offer new products and services to their customers without the upfront and on-going investment required to maintain and grow their market-share position.

At Citigroup, we view white-labeling as a significant opportunity to enable us to grow and cement long term relationships with our bank clients across Asia Pacific. We have heavily invested in technology platforms such as our market leading CitiDirect online banking and multicurrency solutions that can be easily modified for our customers to re-package and sell it as part of their own solution set. We realise the need to extend our relationships with our customers beyond a purely transaction services provider to a solution provider across all of our business lines û cash, trade and securities.

White-labeling for Citigroup presents a number of opportunities. Not only does white-labeling extend our front-end applications to our client banks across Asia-Pacific, but also means we can in-source various components such as payment processing, trade processing; enabling our clients to benefit from our regional processing centres lowering their costs and enabling them to expand into new markets.
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