Fintech for DCM – Build, Buy or Partner?

Since the emergence and continuous maturing of fintechs, banks’ traditional approach towards adoption of new technologies and digital solutions has been put to the test. Historically, it was largely binary – Build or Buy. Fintechs, now firmly part of the financial ecosystem, have delivered an alternative, increasingly attractive option – that of partnering. This has been made even more attainable as cloud infrastructure, SaaS platforms and a plethora of APIs are today more commoditised across financial services in general, and DCM in particular.

Why Build?
Building a fintech solution from the ground up delivers banks full control and the ability to customise. However, this comes with significant challenges:

• Onboarding can be slow;
• Usually, maintenance costs are high;
• Big technical teams are needed;
• To deliver real value in fintech solutions, detailed analysis of the business needs are required and can push the banks’ focus into ‘non-core’ areas.

Or Buy?
Buying a fintech solution is more geared towards saving time with a ready-made solution, faster tech enablement and making budgets easier to allocate and plan. Though again this option has its own challenges – lack of customisation and sometimes difficulties in integration can distil the solution’s technical edge.

Why Does Partnering with Fintechs make Business Sense for Banks?

We believe that banks should consider partnering with fintechs as their primary and future proof option:

• The pace of transformation especially in debt capital markets is increasing exponentially – partnering opens the door to the very latest fintech and adaptable solutions;
• Banks need access to specialist skills and knowledge – they are/should not be set up like “software houses” – fintechs are specialists – allowing banks to focus on their core business needs in collaboration with fintech experts delivering time and money saving solutions.
• Banks are now paying much more attention to their cost base than ever before. Partnering is a cost-effective solution replacing high maintenance annual costs with more flexible licensing or user-based fees.
• Banking fintech requirements to be adaptable and unique – partnering means that banks can have a more direct input to the features of the solution they are getting. Partnering provides exclusivity and differentiation which is important to retain and attract new business.

At Finsmart we have “lived and breathed” capital markets for all our professional lives. We have seen evidence that active partnerships can quickly and securely move the needle for our debt capital markets clients and positively impact the way they conduct their business.

For the Heads, COOs and business managers within syndicate and DCM, lets discuss your needs in more detail and put together the right approach for your business.

Contact info@fin-smart.co to explore how you could partner with Finsmart to deliver all your bespoke DCM fintech needs today.