Written by Adrian Mizzi, co-founder and CTO, Weavr

In this article we will address the age-old question asked by Chief Technical Officers (CTOs) when it comes to appraising software and, in particular, as it pertains to evaluating embedded finance solutions for their business. “Should you build your own solution or buy one?” We look at the benefits of building your own embedded-finance solution as well as why we at Weavr would recommend buying a pre-built embedded finance solution (although, clearly, we have an angle on this one).

Chief Technical Officers (CTOs) are ambitious people by nature, but sometimes that can lead us into danger. With any kind of project, it’s easy to get too optimistic and commit resources to a build that probably should have never begun.

Can your technology team build what you need? How much of a risk will it be to try? And under what conditions should you buy a solution rather than build it?

Asking these questions about any build vs buy decision is always a good idea. Even if you think you’re 99% sure you can and should build from scratch, you might not always be aware of what the other options are, just how much time you can save, and where you can find more critical targets for your own team’s expertise.

How I learned to rein in my urge to build as a CTO

As a CTO or a tech lead, it’s in your nature to look at a potential new element of your product and want to build it yourself. Not only have you spent years honing your own technical skills, but you’ve also assembled a team of developers under your leadership. Those are things to be proud of, and it’s understandable to be confident in your ability to tackle any new development project.

More than that, there are practical benefits to building it yourself – especially when you’re looking at a product through the eyes of a CTO. Building gives you ownership over the solution, and with that comes the power to control how it operates and shape it exactly as you want it to be.

Build vs buy: a CTO's perspective

As a CTO myself, I used to be the same. But in the rush to get stuck in, it’s easy to underestimate the real effort that goes into building and maintaining new tech. In a previous role I was part of a technical team building a new card processor system. At first, building made so much sense – the system would have connected directly to card schemes with additional flexibility, reducing costs and increasing profit margin as a result.  The business case made sense, and it was a cool project to undertake.

However, after we’d already started development, it became clear that the functionality was more complex than we’d first planned for, and we would need millions of transactions to make it profitable. We were spending our precious development resources to build something that is easy to buy elsewhere. When we looked at the bigger picture it made more sense to buy a solution that had already been built, but by that point we’d already invested a year in development resources.

CTOs should only let their teams build where there is a strong competitive advantage

Although the difficulty of building a tech solution from scratch is significant, sometimes the most important question isn’t whether your team can build it – it’s whether you need to.

Adrian Mizzi, Weavr co-founder and CTO on “build vs buy”

The time to build yourself is if the tech is part of your core IP and gives you an edge over the competition. For an example from the financial-services world, consider something like transaction monitoring. If you’re in the transaction monitoring business and building a solution using AI, you can’t go and buy that functionality – you need full control over the solution.

If transaction monitoring is something you need to do to satisfy regulators, why squander your precious resources on it? The solution you need for that particular problem is already out there somewhere, meaning you can buy it and launch it in a month rather than spending a year developing your own version.

That’s the goal at the heart of embedded finance – to lower the barrier to entry for companies that can’t and don’t need to build it themselves. Embedded finance allows them to still get involved with offering financial services without diverting effort away from the UX and core features that will give them an edge.

So should CTOs buy an embedded finance solution?

Well, when it comes to making the choice to build or buy an embedded finance solution, the choice isn’t a straightforward one between build vs buy. If you decide to buy, you still need to figure out what kind of solution to buy in. The decision will depend on a number of factors but the main one will be the question: “why do we need an embedded finance solution?”

Embedded finance solutions often fall into one of two categories. They might be a white label offering with a very simple financial feature set. They do what they do very well, but are limited in scope beyond that and don’t have much freedom to be configured to your needs. Or, they might be ambitious in scope but require embedders to do a lot more building than they’re prepared for

Those hidden elements are no small obstacles either. If you encounter them during the integration and find you suddenly need new development skills or financial industry expertise to move forward, that’s what sets a project spiralling over budget or ultimately never coming to fruition. At Weavr, we help your business reach its goal of embedding finance smoothly and without headaches.

Do you want to build your own embedded finance solution? 

From our direct experience, we propose that, unless you have the capacity of a neo bank, you’ll want to create minimal financial and compliance infrastructure at the back end, and instead focus on your key product features that can differentiate you from the competition.

At Weavr. we offer an embedded finance solution that takes the best of both camps. What embedders buy is access to a wide-ranging suite of financial services that can be integrated quickly via our own pre-built embedded finance APIs and pre-built UX components, as well as the peace of mind that they won’t be left to handle the not-insignificant compliance requirements of a highly regulated industry by themselves. We offer full support on the thorny issue of compliance, meaning that we take on the heavy lifting so you can continue to provide your clients the service they expect without interruption. 

But that functionality doesn’t come at the expense of being highly configurable. Our goal is to enable innovation, without restricting what embedders want to do in terms of their UX and customer journeys. Whether your offering is an application, marketplace or platform, if you’re looking to embed finance into your business, set up a meeting with one of our experts in your industry and request a demo today.

We’ve designed an ‘Embedded finance: a buyer’s guide” for those of you further along in your implementation journey. Check it out here.