Buying vs Building Solutions: A Guide for Analytics Leaders in Credit Unions

As an analytic leader in a credit union, you're often faced with critical decisions that impact your organization's digital transformation journey. One such crucial decision is whether to buy an existing digital solution or build a custom one internally. This blog post will break down the pros and cons of both options, helping you make an informed decision.

Buying a Solution

Purchasing an off-the-shelf solution is often the 'buy' option. These solutions come from vendors, are well-tested, feature-rich, and backed by the vendor's expertise and regular software updates. 

Pros of Buying a Solution

1. Speedy Deployment: Off-the-shelf solutions can be deployed quickly, providing immediate access to essential features. This makes them an excellent choice for credit unions that need a quick solution. In theory that should be the case but incompatibility between a vendor’s platform and your internal systems can slow this down significantly.

2. Security and Compliance: These advanced solutions typically come equipped with robust and comprehensive security protocols, regular updates to maintain system integrity, and essential compliance certifications, thereby offering a significant level of assurance to credit unions and fostering trust among their members.

3. Minimal Staffing Requirements: Purchased solutions typically require minimal additional staffing, which can be a considerable advantage for smaller credit unions that often operate with limited resources and capacity. This efficiency allows them to allocate their available personnel more effectively while still leveraging technology to enhance their services.

Cons of Buying a Solution

1. Limited Customization: While these solutions offer some level of customization, they may not fully cater to the unique needs and requirements of your credit union. Asking the right questions from the onset are key here to ensure this does not become a deal-breaking problem.

2. Dependency on Vendors: With a purchased solution, your credit union is dependent on the vendor for updates, bug fixes, and support. Furthermore, there is vendor risk as disruption could occur because of mergers or business failure. Hence, it is crucial to do extensive vetting before entering into a contract with a vendor.

Building a Solution

On the other hand, the 'build' option involves developing a custom solution internally, tailored to your credit union's specific needs and requirements. 

Pros of Building a Solution

1. Customization: Building a tailored solution in-house allows for complete and comprehensive customization. This means the solution can be meticulously designed to meet your credit union's unique operational needs, ultimately providing quicker, more effective, and personalized support for your members. It will take longer, but sometimes, building it right avoids the compounding effects of technical debt in the future

2. Control over Updates: With an in-house solution, your credit union maintains complete control over the necessary updates, enabling you to effectively keep pace with the ever-changing and evolving needs of your members. This flexibility allows for rapid adjustments and enhancements to services, ensuring that you can meet member expectations in a timely manner. Note that this requires having the in-house talent to properly maintain and troubleshoot the solution.

3. Differentiation: A tailored, custom solution can significantly help your credit union stand out and differentiate itself from competitors in the industry, especially if your specific requirements are highly specialized and unique to your operational needs. This can be the crucial factor that makes your credit union a better choice for customers.

Cons of Building a Solution

1. Longer Development Cycles: Developing a comprehensive solution in-house typically involves significantly longer development cycles, which may lead to potential delays in completion, as well as the necessity for extensive testing and iteration to ensure quality and performance. To be fair, this can also happen with purchased solutions depending on the internal tech stack of your credit union. Even so, overall, one should expect in-house builds will take longer. If time is of the essence, you may want to consider alternatives.

2. Higher Upfront Costs: Developing a custom solution typically involves a higher upfront cost compared to off-the-shelf alternatives. Therefore, it is especially essential to ensure that the revenue your credit union generates can not only comfortably cover these initial costs but also provide a significant and sustainable return on investment (ROI) over time. In some cases, the higher cost is warranted with less maintenance costs in the future. Yet, this assumes your Credit Union has the talent not only to build but also to maintain the solution for the long-run.

3. Resource Intensive: Building a robust solution requires a capable and skilled IT team, along with the necessary bandwidth to effectively manage an increase in service tickets related to bugs, updates, and thorough testing of new features. This can be a tall order for Credit Unions where IT teams are already wearing multiple hats, addressing multiple sides of the firm.

Making the Decision: Buy or Build?

Deciding whether to buy or build a specific digital solution ultimately depends on several critical factors, including budget constraints, the overall size of your organization, change management capabilities, and the strategic importance of the solution to your credit union's long-term goals and objectives.

If your credit union operates in a way that pre-built software can fulfill, purchasing an existing solution may be the best option. However, if your requirements are highly specialized, involve intricate workflows, or demand a tailored solution to address specific challenges, building custom software may be a better choice.

As an analytic leader in a credit union, your decision should be thoughtfully based on what best serves the diverse needs of both your team and your valued members. Whether you choose to buy a ready-made solution or build a custom one from the ground up, the ultimate goal should always be to optimize your essential business processes, enhance the overall member experience, and significantly accelerate your credit union's sustainable growth in a competitive market.

The good news is that you don’t have to make this decision alone. Sometimes, a few conversations with an independent consultant with the technical expertise and industry knowledge can make all the difference.

Let us know how we can help.