Build, Buy or Subscribe ?

In a 2018 report, Accenture captured a revenue growth of 33%, transferring to new entrants of the banking industry. It included digital-savvy challenger banks, FinTechs, non -bank payment institutions etc.


A year later, when they dived deep into the numbers and studied a cohort of 161 banks to find out if a digital transformation in banking co-relates to any substantial returns, in any case.


(12% were digitally focused, 38% were digitally active, and 50% didn’t have any visible progress digitally) - 161 Banks


They found:

  • The first set had a 1.2 X revenue than the cost

  • The second set had a 0.5 X revenue than the cost

  • The third set had their revenue equal to the cost.

Considering that almost all challenger banks have a digitally-focused approach, we can safely say they are taking over the traditional financial institutions in terms of revenue to cost ratio. Digital banking solutions being the catalyst to their growth.


But it is also true that legacy banks are also catching speed with their digital transformation. Though they haven’t been able to embrace it like the challenger banks, they are on their way.


Digital Transformation: An edge for New age Banks over Legacy Banks?


In the recent past, there have been three significant technological changes that have transformed banking.

  • Internet and Mobile Penetration Across the Globe -

It has led to a digital-first approach in individuals and a change in their expectation from services and service providers. They have now become used to instant and cost-effective engagement.

  • The Shift to Virtualised and Cloud Technology -

If it weren’t for cloud technology, challenger banks would have to invest in expensive data centres and hardware for data storage resulting in a considerable barrier to their existence.

  • Architectural Changes to API’s and Distributed Systems -

Conventionally banks would build solutions internally to automate manual tasks. But with the help of API’s, they can now connect with a third party’s API to get the same done in a much faster and cheaper way.


While these shifts have been instrumental for the birth of several challenger banks and startups as it brings ease of operation with abundant opportunities. They have posed a severe challenge to legacy banks.


Challenger banks collaborate with FinTech companies to give their digital savvy users an extended line of services, rich user experience and AI-powered deliveries, etc. With minimum cost, thanks to technological advancements. On the other side, legacy banks are having a hard time competing with them; why?

  • Their core systems were put in place centuries ago without considering the developments that they might undergo.

  • Their collaboration with third parties may put them at higher risk of looking over breaches.

Nonetheless, they are putting their heads together to accelerate their digital transformation journey.


Having discussed how users have evolved and how the emergence of technology has paved the way for banks to service them. There are three ways in which banks can grow with these changes.


They can either internally build solutions, buy them from third parties or subscribe to them.


Let’s compare the three scenarios to find which would be better.



Collaboration is Key


Rather than building digital banking solutions internally, banks may want to leverage the power of collaboration.


Building solutions in-house may sound lucrative because of the advantages that it comes with; however, banks might not have the required expertise for the same and onboarding the required talent will cost them a ton. Whereas on the other hand, buying the entire solution from a skilled third party, having the relevant experience, would be a better bet. But again, technology is ever-changing, and they might not want to commit to a solution for too long as it may soon become outdated.


Most challenger banks go out for subscribing as they find it the ideal way of getting the best services at an affordable cost. While giants mostly think of either buying or building, which isn’t always the best way.


Maybe that is why challenger banks are ahead of them in digital transformation; however, banks like CitiBank and HDFC are changing by subscribing to third-party solutions. They can instantly install them and review their performance without having to invest large sums.


Most of our clients prefer to subscribe to our omnichannel and E-wallet solutions to relish our domain expertise. They enjoy the perks of upgrading solutions with changing technologies while getting access to a qualified team at an economical cost.