The ‘buy vs build’ debate is decades-old. Is it better to purchase off-the-shelf solutions or develop custom solutions? It’s an argument that spans many industries, with software development being a primary area for analysis and discussion.
Regardless of which side you favor, the debate is often overly simplistic and dogmatic, implying that one approach is universally superior.
In digital banking, adopting a binary view of buy vs build is risky. Misunderstanding the nuances can lead to poor decisions.
Just as factories no longer build their own electricity plants, companies should avoid spending resources on non-differentiating technologies, opting instead to buy or consume them as a service. Modern technologies allow micro-level choices, enabling decisions on ‘buy vs build’ for individual components rather than entire systems. This approach, termed ‘Composable Enterprises,’ was first applied in banking by Mambu as ‘Composable Banking.’
The decision to ‘build or buy’ should be based on each solution’s capability, considering various key criteria.
Our experience in today’s Digital Banking technology shows that most vendors are still trying to answer this question in the same binary way, i.e. are we helping banks to buy or build? When I founded Plumery, we decided to change that paradigm. We call this principle –
Our experience with today’s digital banking technology shows that most vendors still approach the “buy vs. build” question in a binary way. When I founded Plumery, we decided to change this paradigm with our principle: “Buy for parity, build for competitive edge.”
Whenever a vendor is overly focused on the completeness of the solution and providing as much out-of-the-box as possible, especially on the front-end side, the tradeoff is significant.
Businesses (banks in this case) are losing a great deal of flexibility and the ability to differentiate themselves, particularly on the UI/UX (front-end) side of the solution, where differentiation is essential. An excellent user interface is a storefront to any bank today, and it should reflect the brand and the values of that bank. Imagine a world where every brand looked the same. How would one business separate itself from the next?
This is almost certainly one of the key reasons why none of the top digital-first banks in the world use traditional off-the-shelf digital banking platforms.
If you want a proposition that goes beyond the mediocre, you should take charge of defining and building it.
The next question is how to do so in the most capital-effective manner possible. While many banks have grand ambitions, few have massive resources. Hence, getting the best bang for your buck is more critical now than ever.
For digital banking, the answer is a platform that provides non-differentiating capabilities and a pre-built Developer and Application Hosting Platform that addresses the complex needs of modern architecture, meeting strict security and compliance requirements. This enables developers to rapidly build new differentiating capabilities without solving complex architecture challenges.
Plumery can help you to leverage build and buy to create delightful and differentiated customer experiences in banking. Get started now.
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