When looking at white labelling any organisation can suggest a complete shopping list of potential requirements and build these into an offering, but it is the customer's (in this case a client bank's) opinion that dictates what is essential to them. From discussions with a large number of banks it has become apparent that whilst both technology and the provision of liquidity are important, they perhaps are only the basics of the overall offering. The commitment on both sides to a long-term business relationship is the essential component that differentiates bank services.

What further complicates the process is that the relationship is not simply between two banks. Two sets of requirements must be considered those of the client bank and those of the end-user. As such, it is important to build a range of functionality, which can be split into elements within the trade cycle.

Pre-trade

Some banks have included offering end-users access to pre-trade services, such as research and market data. Whilst these are complimentary and mirror the services offered by other proprietary bank platforms, at this point they are not considered to be essential. A white label service allows a client bank to brand the site as its own and the upstream bank is invisible to the end-user. Clearly, it sends mixed messages when research is provided to clients in the name of the upstream bank.

Post-trade

Another important element is the download of trade data from the platform to a client's Treasury Management System. Bank settlement must be quick and with little or no manual intervention, allowing all parties to the trade the benefits associated with STP. Although not essential, the provision of CLS services by the upstream bank can differentiate the underlying service by helping to alleviate pressure on credit lines.

Execution

This is the fundamental element within the trade cycle. White labelling must focus on the successful execution of trades, with essential components focussing on the system, liquidity and service.

1. System requirements - The white label platform must be robust, ensuring that it remains online and provides prices on a 24-hour basis. It must deliver automated prices to the end-user in a time acceptable to all parties, whether the prices are coming from the upstream or client bank. It must be easy to use, both for the end-user and for those at the client bank: neither clients nor bank employees will support the use of a system they do not understand, as they will prefer to deal over the telephone in the traditional manner. The system must be configurable, allowing the end-user to set up the trading screens in a way most appropriate to them, for example to view the prices of currencies they most often trade. Users of the platform at the client bank must also be able to configure their screens: one of the benefits of e-commerce is that it allows bank-users to spend less time on administration but this will only be the case if the system allows a level of personalisation. In addition, streaming rates seem to be the market standard at this point, and so these should available.

2. Liquidity - This is another core element of white labelling. The provision of a wide range of global currencies and crosses is essential, with an appropriate depth of liquidity and 24-hour trading forming a part of the service package. This allows the client bank the option to extend the currencies offered to clients and to improve its level of service by allowing trading in other time-zones. Under this scenario the provision of liquidity may be transferred to the upstream bank after the client bank stops trading for the day.

3. Service The system and liquidity components, whilst important, only act as pre-requisites and thus should be seen as minimum requirements for any white label offering. The provision of service and the development of a bank-to-bank relationship are the most important elements of all parties. For too long Banks and software providers have focussed on technology and liquidity, whereas a white label service should be differentiated through the additional services that surround the basic components, and the client bank must have the reassurance of offering services with a trusted partner.

Client support is a core component relating to both the client bank and the end-users, the importance of which cannot be underestimated. The decision by a client bank to agree to white labelling is key to their strategic customer focus, and an upstream bank must provide a dedicated team to users of the system at the client bank and end-users. For example, in the case of the dealing platform being unavailable the end-user needs the alternative to trade over the telephone, either with the client bank or direct with the service desk.

Relationship is key

Over the last 3-4 years a number of articles have been written about e-commerce systems causing the demise of relationships between banks and customers. The argument is that an e-commerce platform offers efficiency, whilst reducing the need to speak with a sales person. It is interesting to note that the most important element of a white labelling service is relationship, as a client bank must have the confidence that its client-service is in the hands of a trusted partner. For example, the relationship must be sound, ensuring the upstream bank does not approach any of the end-users, and the upstream bank must be willing and able to support the client bank with sales and marketing: without which the implementation has little chances of success. White labelling must be approached as a long-term partnership between the two banks, with the aim of developing sustainable profit for both parties.