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Fintech Software: Build Vs. Buy Dilemma

Fintech Software: Build Vs. Buy Dilemma
Alex Malyshev
Fintech Software: Build Vs. Buy Dilemma

The buy-or-build software debate has been going on long enough, and it is time we settled it. To better understand, let us take you down history lane. During the industrial revolution, the economy of Europe was flourishing. Due to this, companies started hiring third parties to take some workload off their shoulders.

Hence began the era of outsourcing, which has changed face over time to a point where companies can buy ready-made solutions. Buying reduces the cost of production and complexities of tasks that can not be performed in-house due to a lack of resources, expertise, and infrastructure. It ensures that the organization can concentrate on its core activities and mitigate risk.

On the other end of the spectrum, critics say buying software damages a company’s reputation, restricts its potential, and brings about huge job losses. So, their best option is to build the software in-house.

That is why in this article, we will enlighten you on the pros and cons of either choice. Hopefully, it will be of great help when making the buy vs build software decision for your fintech company. 

But let’s start from the basics.

What is in-house software development?

In-house, or insourcing, development is the process of building software using specialists from your company with no external help.

Advantages of in-house fintech software development

Here are the benefits of using in-house experts to develop your banking software.

Fintech Software: Build Vs. Buy Dilemma

Full control

All of the team members involved in building the software are employed by you and trained from scratch. They understand your company’s goals, culture, and workflow well to develop software that perfectly matches its intended purpose. Also, you retain ownership of the software code and can use it the way you see fit. 

Direct communication

Seamless communication among team members is a crucial factor when developing software. Communication is boosted when the employees do it face to face. It becomes faster to implement changes to the project and avoid mistakes caused by misinformation.

Carefully selected team members

 You will often entrust your banking or payment software development to people you can trust who fully understand your business process. That is why the recruitment process takes more time and needs to be thorough. So, you end up with employees who you deem fit enough for the role. 

Disadvantages of in-house fintech software development

Even with the benefits of in-house development, it’s not devoid of the cons that can make a strong point for people to consider other options. 

Difficulty assembling an expert team

If your development team is not skilled enough, you need to hire new experts. However, with the high demand for software and development skills, you will find it difficult to attract highly qualified experts. You will need to dig deep into the company’s budget to bring in the best. 

Development time 

It takes, on average, about 40 days to recruit an in-house developer. This information is based on a study performed by DevSkiller. This period also does not consider the time taken for the employee to transition from their old job completely. Also, you will need time for onboarding and educating new employees on the company culture and workflow. All of these processes can extend the development time to a few years. This amount of time is not ideal for the fintech industry, which is rapidly changing. When your solution goes live, it may already be outdated and will need heavy changes to meet new industry demands. 

Development costs

According to Glassdoor, the average developer salary in the US is about $90K. Furthermore, additional costs increase this figure by 1.4 times, according to Joe Hadzima, MIT. This much expenditure to acquire a team of experts can strain the company’s resources, especially if it is a startup.

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You don’t always need to hire in-house developers to build your fintech software. Using a ready-made software from a fintech software development company  like SDK.finance can help you avoid all the cons of building the software in-house. We have already put together stable core software for building a payment product on top which helps seriously cut down on the product development time and costs. It will also reduce the time-to-market for the product. With the SDK.finance software, your team will be able to focus on customizing the core software and working on the new features, rather than building a payment app from scratch.

So, let us explore this alternative to in house fintech development: buying ready-made fintech software from a vendor. 

Pros of buying fintech software

Fintech Software: Build Vs. Buy Dilemma

They say, “necessity is a mother of invention.” If building the software in-house is the solution, then the vast market of ready-made software would not have emerged.

Below are some of the benefits of buying ready-made fintech software.

Reduced development costs

It is considerably cheaper to purchase ready-made software than build one from scratch since you do not require a large in-house IT team for implementation. This leaves your company with more resources to invest in other projects. It is often more affordable because an IT company that develops the solution, commercializes it. You and all the other businesses that purchase the software will cover the cost. So, it is a win-win for all. However, when deciding to build  software from the ground up, you should be ready to carry the costs burden on your own.

Fast implementation and proven technology

Once you purchase the software, it is ready for implementation in your system and complies with the regulatory standards. Also, you do not have to worry about quality since the software has a proven track record with other users. The vendor takes care of all the pre-launch testing procedures and fixes most bugs so that you don’t waste time doing it. 

Access to support and upgrades

Usually, a finech software development vendor that offers ready-made fintech software will help you with implementation, provide troubleshooting services and upgrades. Therefore, you will not necessarily need a dedicated in-house team for all these processes. 

Cons of buying fintech software from a vendor

Even though buying software is generally cheaper and easier to implement, compared to from-scratch fevelpment, it has its disadvantages. 

Significant one-time fee

If you decide to use a ready-to-go fintech solution, then you should be ready to pay a huge amount of money upfront. This is not really conducive for small companies, especially startups since they have limited funds. 

Difficult to choose the right fintech software vendor

Choosing a software vendor for your fintech solution is often a difficult decision to make. This is because your entire business workflow will depend on the platform. With the many vendors that are already on the market, you will need to find one with expertise and knowledge. 

Lack of tailored approach

Ready-made software is often designed to target industries and not any specific company. They do not take into account your unique business model. Therefore, it will lack some features that may be critical for the smooth functioning of your organization. Most often, you will need to personalize the source code based on your needs. 

An alternative to buying proprietary fintech software: transactional core platform with the source code

Fintech Software: Build Vs. Buy Dilemma

For what reason should your best people, or hiring new talent — when this solution already exists in the market, and has been proven to cut costs — work for free when X can be provided for the same cost?

With 15+ years of experience in fintech software development, SDK.finance knows firsthand what it takes to develop actual payments products. Your business can save about 1 year for software development with our ready-to-go fintech software solutions for payment systems, neobanks, money remittance, e-wallets, and other payment-related services.

Why choose SDK.finance payment software with source code?

Independence from the vendor

With the ready-made SDK.finance banking software, you can manage everything in-house. It gives you the possibility to be totally independent from the vendor. 

Freedom to modify

Unlike most other ready-made fintech solutions on the market, the SDK.finance On-premise software provides you with the license to modify the source code. So, you can optimize and tailor the software to the specific needs of your company. 

Full control

The source code solution gives you complete control of the entire product, data, and infrastructure. You can store highly sensitive data on the servers protected behind your own corporate firewall.

Updates on your terms

You can also choose how and when the software is updated so that it does not interrupt your workflow. 

Final thoughts

As shown above, both buying ready fintech software and building it from scratch approaches have advantages and disadvantages. When the project is highly complex, time is limited, technology is not sufficient, the cost is too high, and expertise is lacking, buying a ready-made solution will help meet the expectations. On the other hand, if your company does not face any of the above problems, you can engage in building your own fintech solution from the ground up.

Let us remind you about , SDK.finance provides you with an alternative, a hybrid option – a ready-to-go software 26solution with the ability to modify the source code and a dedicated IT development team for those who want to build from scratch. These are the build vs buy decision criteria you need to consider before making your choice.

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Fintech Software: Build Vs. Buy Dilemma

FAQ

Should you build or buy fintech software?

Fintech software development involves lots of attention to detail within a specific timeframe and highly qualified developers. Although you can hire an in-house team for your fintech project, outsourcing or getting a ready-to-go solution is often the better option.

When should you buy payment software?

You can decide to buy your fintech software when you have the funds upfront to pay. Also, this option is ideal when you do not have enough time to wait for developers to create a solution from scratch.

What are the risks of buying versus building software internally?

The risks include lack of the necessary customizations and third-party integrations, insufficient vendor-side support, sky-high fee etc.

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