In the financial sector, there is often a debate when an organization is thinking about investing in new software: Do we buy software in (SaaS) or build in-house?
The “buy vs. build” ⏤ or stick with a cobbled together system involving spreadsheets, debate ⏤ is a familiar one to many CTOs and CIOs in the financial industry.
TL;DR:
- Software for the financial industry is a multi-billion dollar sector in its own right (Banking, Financial Services, and Insurance; BFSI software is estimated to be worth $91.4 billion in 2024).
- “Buying” software means subscribing to a software service (SaaS, or similar) to solve a particular problem, like improving trade finance operations. Trade finance ops software can manage everything from digitization to the optimization of middle and back offices, and the monetization of trade finance.
- “Building” software that can do all of that would involve having an in-house software team develop an end-to-end software solution that your organization would own. Even if you outsource, you’ll need in-house engineers to coordinate with the company doing the work, managing the project from start to finish.
- There are numerous reasons for going down either route. Some organizations naturally worry about the proprietary nature of the data stored and flowing through software that they don’t own.
- However, other considerations, like cost, quicker time to deployment, scalability, flexibility, upkeep, and upgrades are usually why financial sector companies prefer to buy instead of build an in-house software suite.
Let’s weigh up both options, to help you determine which is best for your financial sector firm.
Read on for more details 👇
What Does Build vs. Buy Mean for Banks & Asset Managers?
Banks, financial institutions, asset managers, and providers, whether in Europe, America, or elsewhere in the world have three main options when it comes to software:
- Don’t do anything: Stick with what you’ve got, whether that’s a legacy software platform or spreadsheets;
- Buy software, have it be configurable and integrated with other systems you already use to solve a particular problem and improve on existing systems;
- Build an in-house solution: Similar to the second option, but your organization would own it 100% and it would be your intellectual property (IP) and proprietary asset.
We aren’t a fan of the do-nothing approach. If you stick with what you’ve already got, nothing will change.
Outdated systems will continue to cause you the same headaches from one year to the next, and the various ways they’re holding back your growth will continue to be a downside risk for your organization.
Outdated systems can also be high-risk, too. You could be leaving your organization wide open to cyberattacks and other security risks.
Excel isn’t the answer either. Using Excel, instead of upgrading to more effective software, is responsible for countless errors, mistakes, and miscalculations. One such disaster cost JP Morgan Chase $2.6 billion in 2012, party as a result of spreadsheet errors within their Value-at-Risk (VaR) model:
“This incident, detailed in a 129-page report by JP Morgan, highlighted the dangers of relying too heavily on manual processes in complex financial models. The report revealed that the modeler was under pressure from traders to accelerate the review process, which likely contributed to overlooking operational flaws and the Excel error.”
If you’re already aware of the problems of doing nothing, then you might be asking: “Do we build software or buy it?”
When it comes to trade finance, working capital financing, and risk management, buying off-the-shelf software might not seem so simple.
Every bank, asset manager, or other financial institution that handles trade finance has unique needs. Hence, building might seem like a better option than buying.
But, what if you could have all of the advantages of building with none of the downsides?
With white-label software, you can scale trade finance operations, manage the entire end-to-end trade lifecycle, and do all of this without increasing headcount or investing 6 or 7-figures in having software custom-built.
Let’s take a closer look at the 7 advantages of buying in trade finance software instead of building it in-house, or having a software development company build it in partnership with your engineering team.
7 Advantages of Buying Trade Finance FinTech Software Instead of Building In-House
1. Faster Time-to-Market
Building in-house software is time-consuming and expensive. It can take anywhere from 6 to 18 months, and you might need to invest anywhere from 6 to 7 figures to get something that will deliver what you need.
In that time, you could be up-and-running with a pre-built and optimized system; allowing you to implement it quickly and start reaping the benefits. Depending on what you need, you could be deployed within anywhere from 2 to 10 weeks.
Launching faster enables financial institutions to stay ahead of competitors and adapt to market trends more effectively.
2. Cost Efficiency
Buying instead of building always comes with a much lower upfront investment.
Developing software internally often requires significant capital outlay for hiring, training, and development infrastructure. Depending on the scope, it could easily cost anywhere from $100K to $1M to have software custom-built.
Even if you outsource the work, an external vendor will have to work closely with your in-house engineering team to ensure what they’re building aligns with internal needs and other software it will interact with.
In comparison, buying software (subscribing to, effectively) means that you will avoid hidden costs associated with building. Costs include maintenance, updates, and scalability challenges that can inflate the long-term costs of internal builds.
When you work with a software vendor to buy software, they should always be 100% clear on the costs, including any implementation costs, and then the ongoing subscription for using the software.
3. Continuous Innovation
When you buy software, such as LiquidX, you benefit from regular updates. The LiquidX solution benefits from ongoing improvements, incorporating the latest technology and features.
That’s not the case if you have software built. If you want anything changed or updated, the software developers or in-house engineers will have to be tasked to complete that work. Any update, big or small, is going to cost extra money.
With software like LiquidX, you can benefit from staying current. Leveraging our R&D ensures the platform is up-to-date without the expense of having to pay for a team to build a new feature.
4. Scalability
Another advantage of bought-in software vs. building is the software your team buys is built to grow.
This gives you a more flexible infrastructure to scale alongside the institution’s growth.
LiquidX gives your team elastic resources. Avoid bottlenecks and ensure smooth performance even as demands increase.
LiquidX software is further supported by Broadridge Financial Solutions, an investment-grade Fintech company that provides operational support.
5. Focus on Core Competencies
Buying instead of building is much better for your team’s internal resource allocation. Working with LiquidX instead of building software means that internal teams can focus on their strategic priorities instead of software development.
6. Access to TradeHub or Holistic Portfolio Reporting
LiquidX also comes with advanced analytics. Our solution can provide insights and data visualization tools that would take months to develop in-house.
7. Reduced Risk of Technical Debt
LiquidX software means you benefit from modern infrastructure. Our solution is built on Microsoft Azure, whereas internal builds can quickly become outdated.
With in-house software, your team has to handle system updates and infrastructure upkeep. Whereas, if you buy instead of build, this will spare you from accumulating technical debt and having to maintain the software.
Now, let’s take a look at why so many banks, asset managers, and other players in the financial sector, in EMEA and the US, prefer to work with LiquidX instead of building in-house software.
12 Reasons Banks & Asset Managers Trust LiquidX to Deliver
Here are 12 reasons why banks and asset managers trust LiquidX with their entire end-to-end trade finance solution.
- LiquidX is white-label, so your customers don’t need to know they’re working through a third-party platform. Find out more about the LiquidX Partner Program (LPP).
- Is platform-agnostic
- Can take in any invoice format ⏤ XLSX, PDF, etc. ⏤ and use that as workable data downstream across the trade lifecycle.
- Can manage the entire end-to-end trade finance lifecycle.
- Provides a real-time dashboard to manage risk (TradeHub).
- Will help you make significant back office savings (TradeOps); Can handle reconciliation challenges for all financial institutions.
- Can handle everything from the needs of global banks to asset managers.
- Is an award-winning trade finance solution: “Best Fintech for Trade United States 2025” Global Business and Finance Magazine
- Includes the advantages of a deep partnership with Broadridge (NYSE: BR), a trusted global fintech leader.
- Supports all markets, with a modular software solution, that supports every market you operate in, including different currencies and asset classes.
- Will help you scale trade finance without the need to increase headcount.
- Gives you the ability to automate distribution. This is going to be especially important when the next, and final set of Basel Accord rules, known as Basel III Endgame comes into force.
Key Takeaways: Why buying might make more sense than building
Overall, there are a lot of reasons why buying might make more sense for you than building software:
- Saves money
- Saves time
- Access to more tools and features
- Much easier to integrate with other software
- More operationally and cost-effective than having software built.
Financial institutions: To request a demo of our end-to-end digital solution, click here.
