For many non-bank financial institutions (NBFIs), the biggest roadblock to adopting new technology includes the lack of a clear roadmap, strategy and guidance.
To that end, business owners like money transfer operators and remittance houses typically have two options to tech-up: build or buy. But often times, they struggle in qualifying the pros and cons of building software in-house versus purchasing an external software-as-a-service (SaaS) platform from a third-party technology partner.
With technology evolving at a breakneck speed and becoming more complex, NBFIs must consider many of the same factors as before prior to investing in either options – scalability, faster time to market, direct cost of development, opportunity costs and the availability of in-house resources, among others – but now with added dimensions such as customer experience, that is a key driver in today’s digital economy.
Here, we take a deeper dive into five key areas of consideration in the build versus buy debate for NBFIs looking to tech-up.
Ownership: With great control comes great responsibility
Buy
Off-the-shelf or out-of-the-box solutions are great for businesses who have minimal to advanced requirements and want to avoid adding to the workload of their internal engineering team. While it is possible that not all business requirements may be met, purchasing a third-party solution is often the preferred approach for most as the onus is on the technology provider to upkeep the platform and provide features and functionalities that cater to your customers’ needs.
Bonus tip: Some technology providers may also offer API integrations aside from their core solutions that allow you to easily build out your money transfer technology stack and extend your business offerings.
Build
This option affords tighter ownership of intellectual property (IP), which could be leveraged as a competitive differentiator for those with complex and unique requirements. Businesses who plan to invest in advanced technologies to create their own proprietary platform are more likely to go down the ‘build’ route. However, the greater level of control comes at the expense of responsibility as greater oversight is needed to ensure a meaningful and successful software deployment.
Monetary cost: Dollars and cents have to make business sense
Buy
Most technology providers now operate on a software-as-a-service (SaaS) model, where an ongoing fee is charged in exchange for rental access to the solution. The beauty of such subscriptions is the flexibility to upgrade or downgrade plans anytime based on business milestones and usage fluctuations; tiered subscriptions lets you pay for only what you need as compared to paying hefty support fees with one-off ‘build’ applications.
Bonus tip: Look out or enquire about trials or lightweight subscription tiers that let you test out product features over a period (usually 14 days!). This will afford you the flexibility and visibility of how a product could possibly fit into your existing workflows before you commit to it over the longer term.
Build
Building your own platform can be a costly affair that runs into the hundreds of thousands of dollars (if not millions!) as its spans the entire breadth of the software development lifecycle from initial buildout, to ongoing support, bug fixes, upgrades, platform migrations, security management and keeping up with software industry trends. A key question to ask here would be if the money invested in product development could be better spent elsewhere e.g. customer acquisition and operational expansion, to positively impact the bottom line.
Maintenance: Listen to the experts
Buy
Tap into your technology vendor’s “tech know-how”, that is, knowledge, skills and capabilities to handle the behind-the-scenes maintenance – this is usually already factored into your subscription fee. It only makes sense to leverage your vendor’s wealth of direct experience and best practices in deploying and managing their solution for their other customers to do the same for you. You’re essentially outsourcing secondary business functions like the platform’s user interface and experience (UI/UX) to a third party who has domain expertise. This means you don’t have to manage your own engineering team, reducing training time and allowing you to go-to-market faster.
Build
Your newly-built software is like a baby that requires constant attention and care to ensure that it continues to work as intended for your operations team and importantly, customers. This likely entails the hiring of specialised staff to increase your product development bandwidth to oversee everything from managing the launch to bug resolution, feature upgrades, product lifecycle and roadmap, regulatory compliance and 24/7 uptime service delivery – it’s a resource-intensive endeavour that requires careful thought before proceeding.
Opportunity cost: Don’t miss the forest for the trees
Buy
Get the best of both worlds when you partner with the right technology provider –focus on scaling and generating profit with your money transfer and FX business without having to worry about running what’s under the hood. Off-the-shelf solutions, particularly white label ones, are a smart way to upgrade your technology to drive new and better business outcomes at scale, all in a dramatically time and cost-efficient manner.
Build
Competition can be stiff in the money transfer and FX space and building technology in-house could detract you from your business focus i.e. a costly decision that could be just the reason your competitors need to gain market share while you’re not paying attention as closely as you could with the ‘buy’ option.
Time: Hit the ground running and lead the pack
Buy
Off-the-shelf solutions let you fast-track your go-to-market plans so that you can expand your business whenever you need and wherever you operate in. In going the ‘buy’ route, your can also avoid challenges in innovating with your internal developers as they might be too entrenched in legacy ways – a factor that may further delay time to market.
Build
Good things take time and as with building anything from scratch, you could very possibly be looking at several years before being able to deploy a meaningful solution. That is, assuming there are no delays on, say, your business or engineering fronts to name a few.
A divide and conquer approach
But we all know how drastically technology could disrupt your offerings. Afterall, isn’t that the reason you’re considering a build or buy approach in teching-up your business?
In evaluating your options, be sure to consider and weigh all five of the above fundamental factors before making an informed decision as to which is best able to help scale your money transfer and FX business. With the right tech-enablement partner, you can achieve cost, time and risk savings that will allow your business to better serve your end customers with cheaper, quicker and digital-first money transfer and FX services.
If you’ve decided that the ‘buy’ approach is for you, it might be worthwhile to consider KOKU’s FX TechUP Suite. It offers a selection of three products that are geared towards teching-up and scaling operational and customer-facing money transfer and FX business needs.