Half-Baked, Fully Functional: The New Standard in Fintech Solutions

Build vs Buy is the classic dilemma most FinTech companies face when evaluating new features into their existing platforms.

Lately, a new trend is emerging that blends the best of both of these - Half-Baked Solutions. Instead of buying an off-the-shelf product and retrofitting it to your platform like some kind of Frankenstein, the solution has a base level finished, then customized to your unique requirements.

In this newsletter, we will explore this new approach and discuss the trade-offs, benefits, and drawbacks between a custom-built solution and an off-the-shelf solution. Check out Our Expert's Take for a deeper understanding.

But first, here is a quick roundup of big news that made headlines in the FinTech industry.

News Roundup!

1. A guide to integrate user feedback
2. European T+1 Industry Task Force Issues Adoption Roadmap
3. Fixed Income Helps BlackRock AUM Reach Record $11.5tr
4. SoFi secures $2bn deal with Fortress Investment Group to expand loan platform business
5. FTX creditors will make money on bankruptcy: $1.19 for every dollar

The Myth of "Plug and Play" Products

Let's cut to the chase. Vendors often tout their fully built solutions as "plug and play," but the reality is far from it. Integrating these systems is rarely seamless. You're often forced to retrofit your unique processes into a one-size-fits-all product, leading to inefficiencies and frustrations. It's like trying to cram a square peg into a round hole.

Why Off-the-Shelf Falls Short:

• Inflexibility: These products are designed for the masses, not for your specific needs.
• Hidden Costs: Customizing them after the fact can be more expensive and time-consuming than you bargained for.
• Technical Debt: They often come with legacy code that's difficult to update or modify.

Half-Baked Solutions: Why it Makes Sense

A half-baked solution provides a strong, adaptable foundation upon which you can build and customize to meet your specific needs. It's not about settling for an incomplete product; it's about leveraging a flexible base that accelerates development and implementation, allowing for tailored features without starting from scratch.

• Customization Upfront: With half-baked solutions, customization happens at the outset. You're not retrofitting or layering changes onto a rigid system; you're building upon a flexible foundation designed to accommodate modifications. This approach saves time and reduces the complexity associated with altering fully developed systems.
• Faster Time-to-Market: Time is money in the fintech industry. Half-baked solutions allow you to deploy essential functionalities quickly as compared to building a custom solution from the ground up, while still providing the flexibility to add custom features.
• Cost-Effective Development: By leveraging an existing base, you reduce the resources required for development. You're not paying for unnecessary features that come with off-the-shelf products, nor are you bearing the full cost of custom development. It's a balanced investment that offers a higher return.
• Avoid Technical Debt: Fully built systems often come with legacy code and outdated technologies that can hinder future growth. Half-baked solutions use modern, scalable architectures that minimize technical debt, making it easier to maintain and upgrade your system over time.

Real-World Application: Trade Automation and OMS Solutions

Consider the implementation of trade automation or an OMS in a financial services company. A fully built product may require significant customization to fit your trading strategies, compliance requirements, and integration with existing systems. This not only increases costs but also extends timelines.

On the flip side, a custom-built solution ensures a perfect fit but demands substantial time and investment.

A half-baked solution offers a robust core trading engine with the flexibility to customize order types, compliance checks, and integration points. You get the essential functionalities up and running quickly, with the ability to tailor the system to your specific needs without unnecessary delays.

Case Study: Successful Implementation of a Half-Baked OMS

A mid-sized brokerage firm needed an OMS that could handle high-frequency trading and complex order types. Off-the-shelf solutions lacked the flexibility they required, and building a custom system would take too long.

By opting for a half-baked OMS solution, they deployed a functional system within weeks. The flexible architecture allowed them to customize order routing algorithms and integrate proprietary analytics tools seamlessly. The result was a tailored system that met all their needs without the time and cost associated with custom development.

Our Expert's Take

Having been through the build vs. buy decision many times, I can tell you that even when you "buy," it’s never truly plug-and-play. Off-the-shelf solutions might sound like a quick fix, but you’ll always end up spending time and resources integrating them, modifying workflows, and adapting them to fit your platform.

That’s where half-baked solutions come in - they give you a solid, adaptable foundation that’s not fully built out, but ready for customization. You get the speed and structure of a pre-built solution with the flexibility to mold it to your needs immediately, without the headache of retrofitting something that was never really made for your business.

Larger and larger companies, including publicly traded companies are starting to explore this avenue and use half-baked solutions in 2024.

That's a wrap on this edition

We'd love to hear your thoughts on it. Also, If you want to transform your surveillance practices and protect your firm from costly non-compliance, please let us know!

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