The decision to build, buy, or partner in banking and fintech can seem overwhelming. Which, of all the dozens of possible solutions in banking, should a company invest in, and what should that investment look like?

It’s a decision that’s been made even more complicated by the way the lines between banking and nonbanking activities have blurred. As financial institutions start to offer cell protection and roadside assistance, for instance, where does banking end and begin?

To get in control of this situation, it can help to answer a single guiding question:

How are we uniquely different from the competition? 

By answering this question in detail — not by vaguely saying “we care about the customer” — you can better answer the broader question of building, buying, and partnering. 

For instance, if your company is uniquely poised to do commercial lending in a certain geographical region it makes sense to build everything you can to further differentiate yourself in that way and buy or partner to do everything else. Or if your unique differentiator has to do with getting deposits from a certain customer segment, do everything you can to further differentiate yourself in that way and buy or partner for the rest.

However you differentiate yourself, focus on that and automate everything else as much as you can.

In short: Build what only you can build.

Boost What You Build Through Partnerships

Even when you build something, you might still need to partner to build the ideal version of that solution. Say that you’re a bank that specializes in a particular kind of mortgage loan, for example. You might find that you need a partner to help you connect via APIs to other kinds of financial accounts, as MX does, to make the verification process smooth. Or say that you’re a credit union that’s focused on improving the financial health of your members. You might partner with a fintech company like MX to offer an app that gives automated and personalized financial advice.

As banking becomes more and more digital — a change sped up by the recent pandemic — it’s bound to increasingly be standard. The truth is that no one (not even the largest financial institutions) can do every part of banking in-house. Working together via partnerships is the way of the future of banking.

That’s why we’ve written about the need to get beyond build versus buy in banking. The truth is that off-the-shelf software can’t differentiate you enough from the competition these days, especially when it comes to speed to market. And as a recent PwC study shows, more than half of bank executives view new competitors as “a threat to traditional banks,” and 61% say having a customer-centric business model is ‘very important’ while only 17% are very prepared.” Those who don’t yet feel prepared can partner to get ahead.

Photo by Tim Trad