Build, Buy or Subscribe ?

Considering that almost all challenger banks have a digitally-focused approach, we can safely say they are taking over the traditional financial institutions in terms of revenue to cost ratio. Digital banking solutions being the catalyst to their growth.

Conventionally banks would build solutions internally to automate manual tasks. But with the help of API’s, they can now connect with a third party’s API to get the same done in a much faster and cheaper way.

While these shifts have been instrumental for the birth of several challenger banks and startups as it brings ease of operation with abundant opportunities. They have posed a severe challenge to legacy banks.

Nonetheless, they are putting their heads together to accelerate their digital transformation journey.

There are three ways in which banks can grow with these changes.

They can either internally build solutions, buy them from third parties or subscribe to them.

Let’s compare the three scenarios to find which would be better.

Collaboration is Key

Rather than building digital banking solutions internally, banks may want to leverage the power of collaboration.

Building solutions in-house may sound lucrative because of the advantages that it comes with; however, banks might not have the required expertise for the same and onboarding the required talent will cost them a ton. Whereas on the other hand, buying the entire solution from a skilled third party, having the relevant experience, would be a better bet. But again, technology is ever-changing, and they might not want to commit to a solution for too long as it may soon become outdated.

Most challenger banks go out for subscribing as they find it the ideal way of getting the best services at an affordable cost. While giants mostly think of either buying or building, which isn’t always the best way.

Maybe that is why challenger banks are ahead of them in digital transformation; however, banks like CitiBank and HDFC are changing by subscribing to third-party solutions. They can instantly install them and review their performance without having to invest large sums.

Most of our clients prefer to subscribe to our omnichannel and E-wallet solutions to relish our domain expertise. They enjoy the perks of upgrading solutions with changing technologies while getting access to a qualified team at an economical cost.

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- Author of this article is Abhinav Paliwal CEO of PayNet Systems, one of the leading White Label Digital Banking and Payments Solution Provider. ( www.paynet.pro)