Many entrepreneurs have gotten stuck on deciding whether to build or buy fintech software. While a personalized solution might appeal to customers, not all startups have the budget to invest in building a customized solution. 

However, buying a ready-made solution might be less cost-intensive when starting up, the software might now scale well with the growth of a business, in comparison to the flexibility building your own software provides. Big financial companies know the long-term
value of customized software, so they are willing to invest from the get-go so they can continually improve their services over time. 

There is not a one-size-fits-all answer to whether or not a company should build or buy fintech software. Rather, there are a number of factors that should be taken into account before making the decision.

Depending on the size of your business, the capabilities of your in-house team, and whether you’d like to hire a software development partner, each option has different outcomes.

This guide will support entrepreneurs – from startup founders to enterprise-level CEOs – in making the best software choice to future-proof your business. 

Digitalization is Here to Stay

Businesses are always in need of innovative software that will improve their offerings and services. Whether a client needs a ready-made solution or a customized one depends on many factors, including the industry, the type of digital product, their business
model, maturity, and position in the market, to name a few. 

Banking and other sectors of the finance industry have been going through major digitalization in the past several years. This means that while a lot of software already exists, there will probably always be new fintech technology to adopt.

In many instances, companies hire independent consultants to evaluate whether a software solution already exists for a problem they are trying to solve, or if it would be smart to build a custom solution. 

For example, suppose an established expense management company wants to expand its application with a new functionality. They can either acquire a startup that owns a tool with the feature they want or develop the new functionality themselves. In this case,
making the right decision is not as simple as it might seem, and the company must consider unknown costs like licensing, compliance, maintenance, and hiring a consultant for an unbiased perspective.

In some cases, ready-made products can solve business problems faster and offer the best service for future users. On the other hand, sometimes there is no existing solution, or the ready-made solution doesn’t offer what the client needs. In this situation,
it would make more sense for the business to pursue developing a customized solution.

When helping our clients, we make sure to be objective, consider what will help our clients achieve their goals now and in the long term, and ask the right questions. What are some of the questions we usually ask? Here we gathered the best insights from
the following questions. 

The First Question: What is the Problem You are Trying to Solve?

Before the build vs. buy debate even begins, decision-makers should arm themselves with a thorough understanding of their company’s current market position and the problem new software needs to change. Each company has unique pain points that need to be
resolved, and only with a clear understanding of the problem can we discover the right solution. 

Before navigating through the decision-making process, hare are some of the key issues we advise our clients to take into account before moving forward.

1. Project Scope and Requirements

Many challenges that startups and SMEs face are very common to the industries they’re a part of, and often, the market already offers solutions to the challenges through commercial software. 

If your problem fits into what has already been solved – we’d consider it a solid argument for buying instead of building. However, if the pain point goes far beyond what any existing software can offer, then it is worth considering making your own software.

2. Resource Availability

When building software internally, one of the first things you should consider is whether you have enough people and resources to ensure the software development will be completed without going over the planned budget. In case you don’t have enough available
developers for your project or get to expand your team so you can start working on your project as planned.  

Analyzing the potential impact of pulling valuable resources from other ongoing projects is also important when assessing the viability of your decision.

3. Perceived Project Value

If the challenges you face are time-sensitive, ask yourself and your team how long the company can hold off buying or building before problems start to affect your business. When time is of the essence, buying software will quickly address your needs, as
opposed to waiting for months (or even years) for your team to build a solution. However, do keep in mind that integrating bought software into your core system can be challenging and labor-intensive as well.

4. Maintenance Costs

Maintaining software demands additional resources. When selecting between building versus buying a solution, we remind our clients that when they buy software, the vendor is in charge of maintaining the product, and doesn’t require additional time from your
side. With a custom solution, if an unexpected bug, error, or system shutdown occurs, your internal or external support and maintenance team will be responsible for fixing it.

6. Compliance and Coherence

There are a number of modern tech stacks out there, and not all of them interact harmoniously with each other. That’s why introducing a newly bought solution might conflict with your existing tech stack or might even require a complete migration from one
technology to another. 

For example, one of our fintech clients that have been using AngularJS had to move to platforms like React or Vue as AngularJS became outdated, and we analyzed their current system to see whether going custom or buying ready-made is the right path for them. 

Different companies rely on a specific ecosystem of apps. When you’re deciding whether to build or buy new software, remember that it should act as an extension to that ecosystem rather than an intruder. That’s why it’s crucial to analyze the software and
understand its architecture and technology stack to know if it’s an easy solution, or if it will just cost you more time and effort.

In some cases, by hiring an external consultant to analyze, examine, and map out the integration process, you can save a lot of time, stress, and money. Especially if you are still deciding whether to build or buy fintech software, a detailed report and
expert guidance will you an objective overview and help you in the decision-making process. 

The Second Question: What are the Project Requirements? 

For both startups and big companies, the second step in the decision-making process involves an in-depth analysis of the project’s requirements. Once everything is assigned a level of prioritization, it becomes easier to make well-informed
decisions. 

When looking to create an additional tool or a new module, buying is usually the fastest way to gather information on user behavior and see whether there is interest in the feature. With an off-the-shelf solution, it’s easier to validate a business idea.
Also, it allows businesses to release a product much faster and gain useful feedback from the market. 

Companies with big ideas that cannot find already-made solutions to answer their project requirements will likely need to allocate time and money to create a customized solution. Since they have already validated their business concept and analyzed what
solutions exist, they can better ensure their investments will have a good return. It’s also a way to keep their business moving forward, expand their offerings, and reach new clients. 

When going through the project requirements, these are the key issues to take into account before moving forward:

1. Compare Project Cost-Effectiveness with Budget Requirements

Startups and early-stage entrepreneurs usually have limited access to funding, so their decisions tend to focus on costs before other aspects. For them, budget requirements dictate how decisions will be made and the prioritization of features. 

While buying software can come with a high upfront cost, for many early-stage entrepreneurs, it’s an expense that at least comes with a fixed price, and its value and speed-to-market can outweigh the drawbacks that may occur with third-party solutions over
time. 

For small companies that need a solution that is not yet out there, a viable option is to hire an external team of tech and industry experts with the right experience to quickly develop and deliver a high-quality product. 

Considering all of the available options and comparing what each of them costs – in terms of money,  labor, and future challenges – will provide better insights to make a calculated decision that won’t jeopardize the future of your business.

2. Optimize Time-to-Market

Small businesses need to have a product ready for market as soon as possible. That’s why most of them need flexible solutions they can immediately incorporate into their system. Once the product is on the market, it becomes easier to plan the next step in
its development. 

For companies that want to quickly get to market, it’s important to intensify and improve workflows, reduce their scope of features and focus on effective work.

3. Finding the Right Development Team with the Right Experience

Regardless of whether you choose to buy or build a solution, keep in mind that you must work with developers who understand the technology. For example, if you decide to buy software, by having developers ready to integrate it on your platform, you will
save valuable time to get everything up and running. 

In the case that you want to build a solution, your team must have the experience and knowledge of the tech stack and a clear understanding of what you want to accomplish with the product.  

The Third Question: How Will Building a Solution Affect Your Business Positively & Negatively?

In scenarios where your operation processes or current software require updates or a drastic change – and especially if you have an experienced in-house team, buying a third-party solution can have a negative impact on time-to-value. 

The experts at Softjourn guide our clients to build their own solution if they:

• Want more control over the final product

• Have access to a great team who knows how to develop the solution

• Need to update their current solution

Developing your product gives you more freedom and control over data, features, and support. Platforms may offer a number of useful features, but if the integration process is too complex, you’ll lose money and time. When developing your own solution, one
of the goals should be easy integration and full connectivity with the current architecture.  

We consider these to be the top benefits of building a custom solution:

• Full control over the product

• High level of customization

• Solves your unique problems

• Coherence with tools currently used in the company

• Complete control over architecture and code 

• No dependence on external teams for maintenance

However, the following challenges are also present when building fintech software:

The Fourth Question: How will Buying Third-Party Software Benefit or Impact Your Business?

Buying a solution seems like an easier decision at first sight. However, this is only the case if you have defined your problem, know exactly what you need from a solution, and have found third-party software that solves the main aspects of your problem.
If that’s where you’re at, then congratulations, you can feel confident that buying software is the right way to go since you can quickly launch your product and start earning. 

Additionally, if your team cannot handle additional pressure, and your time and budget are limited, then you also will come to an easy decision. Buying software will get you to a solution faster and your teams can focus on your product and integration process. 

Pros of Buying Software Over Building a Solution:

Cons of Buying Instead of Building:

• Dependence on the software vendor and their decisions

• Low level of customization

• You still must work on integration

Consider All the Available Information 

Finding a simple answer to the question of build vs. buy fintech software is not always possible. Luckily, once you have the research and reasoning behind your decision, it becomes much easier to map out the process and make the final call. Always try to
look for project-specific solutions and communicate with your in-house tech teams on how to get your product to market faster and at the finest quality. 

Before making a decision, try to consult with experts to help you make the best decision about buying or building software. We advise always to take into consideration the project scope, resource availability, perceived value, and your business goals and
priorities.