Buy vs. build for banking technology

Which is the best path for bank digital transformation?

In this white paper from Deloitte and nCino, experts will explain how digital technology is required for today’s financial institutions (FIs) seeking a competitive advantage in customer experience, improving internal operational effectiveness such as loan origination practices, streamlining internal communications, and allowing wider enterprise data access. When seeking true differentiation, FIs for years only had the option to build this banking technology, a choice typically feasible only for the largest organizations. Today, the decision to buy vs. build is more compelling than ever. Our comprehensive analysis can help guide your decision of choosing the right technology and system integrator partner (SI partner).

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Banking technology: Exploring buy-vs.-build options

Modern, cloud-based digital technology is necessary for financial institutions that are seeking to differentiate their customer experience, improve internal operational effectiveness, streamline internal communications, and allow access to data across the enterprise. For years, the only option for creating differentiation in the market was for FIs to develop such technology in-house at great financial and resource expense. But today, banks and credit unions have a better option: the ability to buy technology and implement it quickly, cost-effectively, and more efficiently than they could on their own.

In this whitepaper, we explore how the vendor landscape has evolved over the past five to 10 years, making the decision to buy vs. build more compelling than ever. We also share an actionable road map for approaching the bank digital transformation journey, with learnings and leading practices gleaned from hundreds of engagements with financial institutions of many sizes and with a wide range of strategic objectives.

The shifting sands behind buy-vs.-build strategies

Digital technology has evolved to become both the primary mode of differentiation, as well as the means of leveling the playing field for financial institutions (FIs) of all sizes. At one time, banks and credit unions had little choice but to design and build their own differentiated technology solutions such as loan origination systems in-house to meet these needs. As demand has grown for digital interactions and more efficient, streamlined back-office processes, the quality of solutions and third-party vendors has improved markedly. With this evolving landscape as a backdrop, the case for buying your digital future versus building in-house is more compelling than ever.

The challenge of digital transformation

Financial institutions are struggling. While large enterprise banks are endowed with the resources and capacity to build some (but not all) of their technology in-house, and smaller FIs have been accustomed to outsourcing their technology stack for years, midsize institutions are seemingly the middle. But today, wading in slowly is no longer an option. Customer expectations are changing rapidly, particularly in the wake of the pandemic, which started in 2020 and has driven consumers of all types to embrace digital interactions and value the speed and convenience of “anytime, anywhere” banking.

The hidden costs of building in-house

One option for tackling the digital transformation challenge is to build your own technology stack and digital capabilities in-house. While this approach seems to offer certain benefits, such as greater control over the implementation of desired functionality and the ability to add new, fully customized capabilities over time, there are a host of hidden costs involved. Before you decide on a build-only strategy, consider the following:

  • House foundation, which must be built first
  • Hiring, developing, and retaining talent
  • Rapid obsolescence
  • Cost of continued innovation
  • Inevitable cost overruns

The benefits of buy

Today, FIs have multiple options when it comes to implementing and adopting digital capabilities and leveraging cognitive technologies like AI and natural language processing. By taking a buy approach, FIs can benefit from these cutting-edge capabilities quickly, typically within 12 months, and apply them to solving issues and market demands. They also can typically take advantage of these breakthrough technologies without having to hire subject-matter experts, who are in short supply. Vendors have laid all the complex groundwork through their productization processes.

Choosing to buy next-generation banking solutions will also help you achieve return on investment (ROI) more quickly because implementation cycles have become significantly shorter than building the same functionality in-house. Benefits of efficiencies and cost savings, or a boost in sales growth and revenues come sooner and allow reinvestment into enhancement and growth.

In addition, by partnering with a leading SI partner and utilizing cloud banking technology, firms can innovate and scale operations quickly to address market and industry changes as they happen.

Buy and build?

When taking a buy path, there are some unique situations in which in-house development of your digital capabilities can make sense. One such scenario is when the specific capabilities you want or need are not presently available on the market—take loan origination software as an example. Also, if your institution’s driving principle is to innovate or disrupt the market through technology, you may choose to build some of your capabilities. Even then, it is very common to need to buy new tooling and enable capabilities to support the in-house effort. It’s important to have a clear-eyed vision of your company’s goals and what industry you operate within.

Road map for an effective banking technology buy strategy

Once you’ve made the decision to pursue digital transformation through a buy strategy, the job doesn’t end there. How you implement your strategy is critical to ensuring you make the most of your investment and achieve your goals within the time frames and budgets allotted to the project. Follow this seven-step road map to ensure the success of your mission:

  1. Plan first, act second.
  2. Address low-hanging fruit first.
  3. Don’t stop there.
  4. Analyze your existing processes.
  5. Select the right vendor and SI partner.
  6. Design, build, implement.
  7. Train and communicate.

Learnings from the buy-vs.-build trenches

Some FIs have attempted to go down the build road, with mixed success. Often, an institution will have ambitious plans and make significant financial, resource, and personnel commitments up front. Unfortunately, these institutions will often spend a year or more on the transformation project without ever having a substantial part of the business go live on the product. Such projects are entered into with all the best of intentions with a lot of good work getting done, but the result is not what anyone expected, as the goalposts have been moved. Ironically, if the implementation had taken only six months, it could have been a successful project that achieved its initial goals and objectives. But an in-house build takes time, which is why it often doesn’t hit the (ever-changing) mark.

When we make technology decisions for the Commercial Division, we generally ask whether this is impacting something that is unique to us and the way we do business, or is this something that we can buy and configure way that works for us?

– Scott Andrews, COO, Commercial Division, BOKF


Changes in financial services are accelerating, and institutions must pursue digital transformation to meet the evolving needs of the market while improving the efficiency of their internal processes. When comparing critical factors like speed to market, ROI, the ability to hire for specialized skills, and ongoing software maintenance, the buy side is often overwhelmingly the correct choice for institutions of all sizes.

Submit information to access the Deloitte & nCino paper “To Buy or To Build”

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Let's talk

  Joseph Cody
Banking Transformation Leader
Deloitte Consulting LLP
  Fadl El-Laoune
Specialist Leader
Deloitte Consulting LLP
  Jim Baxley
Executive Director
Global Market Strategy

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