The fintech industry is actively developing, offering users new interesting solutions and leaving room for players with innovative solutions to enter the market. If you want to start your own fintech company or create a neobank from scratch but are unsure about how to implement your idea, this article is for you. You will learn about the pros and cons of launching a solution using the SaaS model, developing a solution from scratch, and using a license.
Purchase of SaaS Banking IT Solution
If you are a beginner and plan to start with a fairly simple solution with basic functionality, then you should choose a SaaS banking IT solution. But you should understand from the very beginning that SaaS will provide standard features, which means that the customization options will be limited.
Pros of the SaaS banking IT solution model:
- The ability to launch the system within three months.
- The ability to make minor changes to the product to meet your business requirements, including changing the business logic, branding, and changes to end-user applications, etc.
- No need to maintain an IT team for implementation and support.
- The ability to predict the costs, which will include setup fees and monthly fees.
Cons of the SaaS model of banking IT solution:
- A SaaS banking IT solution offers pre-developed functionality with ready-made integrations and at the same time limits the addition/development of new modules or custom integrations.
- The system is offered with the hosting of the provider. Therefore, there is no possibility to deploy it on your servers.
- The monthly fee increases with the increase in the number of clients and transactions.
Purchasing a Software License
If you already have an operating business with a client base, product portfolio, and a clear vision for business development or you have a clear understanding of the future portfolio of your products and a budget for software, then you can choose a software license for a banking solution.
With this model, you will be able to make new integrations and various changes to the ready-made solution. Compared to SaaS, a software license for banking software will provide more options for customization and changes, and will also save money on monthly payments in the long run.
Pros of a Banking IT Software License:
- Combination of broad functionality and fast time to market.
- More freedom compared to SaaS (possibility to deploy the system on any hosting).
- No need for a large internal IT team.
- Possibility to create a custom solution.
- Control over data, because the data is on your side.
Cons of a Banking IT Software License:
- Limitations on the ability to make major changes to the product, since you need to request permission for changes from the supplier.
Buying a Ready-Made Banking IT Solution With Source Code
When should you buy a ready-made banking IT solution with source code? If you want to launch your fintech platform in a short time and are not ready to spend many months or even years on development, then a ready-made banking IT solution or buying a platform with source code is suitable for you. However, it is worth keeping in mind that you may need an experienced IT team that can make changes and improvements.
Pros of a banking platform with source code:
- Having the source code at your disposal gives you more customization options.
- Control over all data. All data is on your side.
- Ready-made banking IT solution, approved by regulators. The system is developed based on the experience of various IT professionals in the industry.
- The ability to test the system before buying (no surprises, compared to software developed by you).
Cons of a banking platform with source code:
- Purchasing a platform with source code is quite expensive and requires significant investment at the initial stage.
- Initially, vendor guidance and training are required for setup and changes.
Developing Your Own Software
If you want to create a neobank from the ground up, you have specific requirements for the functionality of your banking solution, or there is no solution on the market that meets your requirements, then developing your own software is for you. However, it is important to consider that creating, launching, and maintaining software in the long term requires large financial resources and a qualified IT team.
Pros of developing a fintech solution from scratch:
- Full control over the development process, including functionality and interfaces. There are no restrictions on customization, making changes, and adding new features both now and in the future.
- Ownership of the software code and applications.
- Independence of the technology (it is not owned by external suppliers).
Cons of developing a fintech solution from scratch:
- High implementation costs, which are difficult to calculate and predict at the very beginning. Schedules and deadlines may change, and actual costs will most likely exceed the budget. In other words, you should be prepared for high costs throughout the project.
- The scenario of creating software from scratch in a relatively short time is not possible.
- An experienced IT team is required. You may need additional time to find a team and IT specialists. Keep in mind that human resources can be one of the most significant costs in the entire development process.
- The fintech industry is changing rapidly. For this reason, your new release may be outdated by the time it hits the market. Once development begins, you will receive a ready-made banking IT solution in 1-2 years.
- In addition to the expensive internal team, there may be some risks associated with the loss of competencies due to the departure of certain employees. This can negatively affect the timing or the product itself.
Final Thoughts
Releasing a quality fintech solution requires a comprehensive approach that includes many aspects, including the product development model and compliance with regulatory requirements. Success in the fintech industry largely depends on a deep understanding of user needs, the ability to adapt to a rapidly changing market, and the implementation of innovative solutions. Ensuring the reliability and security of the solution is also important. If you want to develop a neobank from scratch, we recommend paying attention to Agilie, a company with extensive experience in developing solutions in the fintech industry.
