When it comes to launching new products like bonds, mortgages and private pensions, businesses in the financial services sector have two choices: they can either apply their own brand to an existing 'white label' product that's been produced by a third-party, or else they can create a product of their own, from the ground up.

The first of these options is attractive for many reasons. First of all, there are very few overheads involved with pushing out another company's product, since the team behind the product's inception will typically handle all of the regulatory requirements, product administration and IT systems behind the scenes. As such, all that's left for the vendor to do is add its logo, organise some marketing, sell the product and collect its commission.

However, these are of course pitfalls to this approach as well. For a start, the vendor in this scenario is wholly restricted in terms of the actual details of the product being sold. In other words: 'it is what it is'. The terms of the actual investment, the pricing, the potential returns, the commission and many other factors are normally set in stone at the beginning. As such, the vendor normally doesn't have the ability to modify any of these details, and so is therefore powerless to react to changes in the market or in response to customer feedback.

Despite these drawbacks, many companies – especially new players in this market like the large supermarkets and heavily branded firms like Virgin – may feel that it is easier to take this approach than to work with an outsourcer to develop a product for themselves. And for some of these new entrants to the market, that may be true – for the moment, at least.

However, simply selling the products of another company may be short-sighted for more experienced players, such as major banks and other established financial institutions. By adopting this approach, companies like these will be missing a chance to differentiate themselves with a unique product that would truly stand out in this crowded market. Not only that, but if these organisations are currently selling high volumes of white label financial products, they are also missing out on a significant amount of revenue, since their margins would be much larger if they were selling an exclusive product that they have created and launched themselves.

Most financial institutions are actually well set up to create these sort of products for themselves: they often just need a little support. A common fear among organisations in this sector is that they will need to build whole new systems and address large-scale administration and regulatory requirements in order to launch a new financial product of their own, but that is not always the case. By working with a specialist outsourcer, financial institutions can delegate the majority of this responsibility, and focus instead on creating an exclusive product that is in tune with its culture and brand, that is truly unique, and which will appeal to its own individual customers.

Tony Collins, CEO, OPAL