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When commercial lending is a key capability and you’re ready to streamline your processes and workflows, should you buy or build a loan management solution? A digitized solution can significantly improve your operations and results, so you want to make the best choice for your bank or credit union. For example, a system can automate data collection, enabling employees to focus on high-value tasks. It can also enhance the consistency and accuracy of underwriting, accelerate the time it takes to make decisions, improve your monitoring capabilities, and enhance portfolio and risk management.

To gain these advantages, should you buy or build a commercial lending system? We’ll explore both sides of the question to help you clarify which approach may be right for you.

Advantages of buying

The biggest advantages of buying are saving time and money.

Time savings: In most cases, your system will be ready sooner with a solution you purchase.

“I have seen both sides of the question,” says fintech CEO Booshan Rengachari. “You need to build if your business is truly unique. But if you are doing something commoditized, which is very common across the industry, there is absolutely no reason to build it. Building a solution takes a lot of time. By the time you release it, you are already two years behind your market.”1

Money savings: “Total cost of ownership is higher for internal builds around 64% of the time.”2 You’ll also save money by paying as you go, which helps maintain your capital efficiency ratio. Additionally, the competitive pressures faced by vendors can result in a better system at a lower cost.

More benefits of buying a commercial credit system include:

  • Intuitive and user-friendly solutions, developed to accommodate a wide range of users
  • Updates that meet evolving market and customer needs, vs. spending money on fixes and maintenance
  • Suggestions about best practices and workflows, based on vendors’ experience with other installations

When you consider the time and cost savings plus the experience vendors have gained over time, buying a loan management system can be the best choice.

“An organization’s expertise is generally not developing B2B software solutions. Why spend countless hours having your best people — or hiring new people — architect a solution that already exists and is proven in the market? Generally, a vendor has already solved the same problem hundreds of times, therefore bringing clients the benefits of best practices based on others’ experiences.”3

Advantages of building

When there are no systems available that meet your company’s unique needs, you may need to build your own. Building a solution can help you meet your exact requirements, address a single issue that needs a specific fix, or leverage your unique intellectual property or technical expertise.4

Still wondering which way to go? Consider these factors

When weighing whether to buy or build, here are several questions to help you decide:

  1. What are our requirements? Which features do we want and need?
  2. Is software available in the market to address our challenges?
  3. Do we have internal resources to build the system?
    • Do they know the business?
    • Will they be available for maintenance once the solution is built?
    • Do they have the skills and availability to keep up with industry and software changes?
    • Will they deliver a stable product, or a perpetual beta solution that is always “almost ready”?
  4. Which is more important – getting the system up and running quickly or full customization?
  5. What are the costs for each scenario?



    • Software licensing and maintenance

    • Hardware (for on premise) or Hosting (for the cloud)

    • One-time implementation fees

    • Customization and upgrades

    • Internal resources, including salaries for project manager, designer and engineers

    • Hardware and software costs

    • Ongoing costs for maintenance, bug fixes, new features and upgrades


  6. Who can best address our technical requirements such as configurable templates; single sign-on with role-based user access; and two-way integration with our core, CRM, and other enterprise systems?
  7. What are the needs of our stakeholders – customers, bankers, lenders, underwriters, managers, leaders, auditors and examiners? How can we best meet these needs considering all groups?

One more item: product vs. project management

“A project plan without a product manager will invariably lead to an average product. Choosing an external vendor with strong Product Management capabilities can help create a successful outcome.”5

Build vs. Buy? Decide what’s right for you.

After considering key factors such as requirements, timing, budget, resources and stakeholders, you’re ready to get started. Whether it’s “buy” or “build,” exploring your needs and constraints will you help make the right choice.

“In most situations, working with a reputable provider to deploy a proven solution will allow companies to get the technology into the hands of users more quickly and generally ensures that the solution will have more comprehensive support throughout its life cycle.”6

Enjoyed this blog? You may also want to view Challenging times, updated processes (or Five reasons to automate your loan review process).