To buy or build software? That is the question

To buy or build software? That is the question

There are many decisions to make when starting a business, but one of the most important will be deciding whether to buy or build your own software.

The 'buy vs. build dilemma' comes up often in the fintech (financial technology) space especially, given that technology or products are utilised to deliver financial services.

As a fintech company, building software involves managing the entire in-house IT development process to create your own software product from scratch, whereas the other option is to buy off-the-shelf software products from a developer or third party.

There are five key areas you should look at to help decide whether to build or buy your own software. These include competition, timeline, scalability, resources and user experience.


The main reason for a company to build their own software is often to gain a competitive advantage. If your company uses the same off-the-shelf software product as your competitors, it can be difficult to outperform them and establish a point of difference.

Particularly in the fintech space, it is a major advantage to own the intellectual property of your software technology. If this is key to your company's strategy, then opt for building your own software from scratch instead of buying it from a third-party developer.

Building software in-house can also help companies gain a competitive edge when it comes to data storage and information. If you buy software from a third party, you'll need to consider how they'll use your data and whether you'll be able to access important consumer data and insights. If data is vital to your company's competitive advantage, building software is the smarter choice.

Take for example, Nifty Personal Loans, which digitises manual processes to hand out same day loans in a faster and efficient manner.

"I think there are definitely benefits to building your software in terms of data storage and information," says Nifty Personal Loans CEO and founder Andrew Bell.

"This is especially true considering some of the limitations of off-the-shelf multi-tenant systems. Having unrestricted access to raw data provides much greater opportunity and ability to find insights."


Is time of the essence? This is one of the key questions to ask yourself when it comes to the 'buy vs. build' predicament.

Generally, it is faster to buy off-the-shelf software products from a third party than build the software yourself. Buying software is quicker as it's ready to use straight away and doesn't require the logistics and resources to build an IT team. From development to production, designing your own software is a time-consuming process and requires a long-term commitment.

In addition, if your software isn't correctly developed or comes up with issues, it could delay your time to market even further.

As the fintech industry is rapidly changing and technology continues to innovate, you face the risk of your product or service being outdated by the time it hits the market. It might also need tweaks to reflect the new changes or requirements in the industry.

Ask yourself if you want to get on the market as quickly as possible. Do you want your target audience to know about the benefits of your product or service sooner rather than later? If it's a yes for both questions, then buy the software.


One of the advantages to building your own software is that it can help scale your company effectively.

As your company grows and adapts to industry changes and consumer behaviour, using the same software product can become stagnant, whereas it is easier to modify your custom software to align with necessary changes.

"We started out with our software," says Bell.

"When we looked at off the shelf products, what we found is that there was nothing that fitted exactly with what we needed and these solutions were also very expensive. Developing our own software gave us the flexibility and control to take our operations to the next level."

It is also easier to combine your own custom software with other different software programs. For example, a particular software program you use for a specific task isn't compatible with another software program for another related task. If both software programs don't work together effectively, it'll hinder your company's ability to be efficient and productive resulting in lost revenue.


Deciding whether to build or buy your own software also comes down to how big your budget is.

For companies with a limited budget, buying off-the-shelf software is usually a cheaper option than building your own from scratch, whereas if you build your own software you need to make sure you have the budget to not only develop it but also maintain and support it over the long-term.

The key to building your own software successfully is hiring a solid IT team that has the capacity to keep upgrading the software and troubleshooting along the way. It's a long-term commitment so companies need to consider if they have not only the time but the financial resources to build software successfully.

While building your own software and hiring an IT team can be costly, consider how it can lead to increased productivity. If your software is specifically designed to meet your company's needs and works efficiently, it allows your staff to work effectively. For example, if there are issues with the software and the troubleshooting needs to be outsourced, it could lead to downtime and decreased productivity.

User experience

As customer-facing software plays an important role in the fintech space, user experience is an important factor to consider. One of the downsides to buying software can be the lack of customisation available as third-party software products tend to be generic in its functions.

As a result, you risk losing control of how much you can tailor your technology to meet your company's specifications and needs.

As you can see, there's no one-size-fits-all solution when it comes to deciding whether to build or buy your own software.

"I think given the diversity of Australian businesses, especially in the lending space, and the size of the market for off-the-shelf software, this is something each business should decide for themselves. While we value self-reliance, we also see the value of collaboration," says Bell.

As a company, you need to take the time to consider the pros and cons of each approach and decide which one will effectively serve your business' needs and goals.

This article is sponsored content in partnership with Nifty Personal Loans.

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