Hello new readers and welcome back to those that follows this blog series. My name is Tim Li, founder the a fan of all things fintech related. My background has been in banking and lending technology for the past decade and a half and I’ve worked at a few interesting places including big banks and small fintech startups.

Talent

Most of the places I’ve been to struggles with building and maintaining high performing lending platform. There are several reasons why this was and still is the case.

First, talent. Nowadays, it’s hard to find great software engineering talent, let alone software engineers that understands finance and perhaps have built bits and parts of an entire lending system. These unicorns are hard to find and often carries an expensive price tag…

Hello, welcome to my 2nd installment of Behind the “apply” button. This is my first special weekend edition where I talk about the sights and sounds of FinTech. If you missed my first episode, please click here.

Today, I am going to talk about Build vs. Buy?

Cost

When I talk to my partners, sometimes it’s clear that they have made their decision, and it is to buy. They have done their math.

To operate a fintech back office, you need at least 3 engineers and 3 data scientists. You need a frond end, full stack and an UI/UX engineer. If one of the co-founders have some technical background, you might be in luck, otherwise, you might need to hire someone else to manage the team. Now you have four in your engineering wing.

As far as data scientists goes, it’s the same, if you might need to hire someone to oversee their work and build A.I. or Machine Learning algorithms to plug into your shiny newly build system.

Your payroll might top $2 million a year just to keep an engineering and data department going. And it could take you two years to launch something that may or may not work. On to of it all, you have to immediately start to raise money to sustain your business before you make your first loan.

A decade ago, when FinTech was just entering into our lexicon, technology was the shiny object when it comes to your equity raise. Today, how you differentiate yourself is no longer technology. It is your unique business model.

Infrastructure

With Fintech ecosystem maturing and infrastructure players like us (Alchemy) and others such as Plaid, Argyle, a variety of credit bureaus, it is a no brainer to buy or rent a system and save your money and mind share to focus on your unique business model.

You can launch your business by leasing a system at a fraction of the cost and at a fraction of the time. When you don’t have to worry about managing a technology and data science team, the amount of time is left to really focus on your customers and your merchants.

Until next time, thank you for spending a little bit of your time this weekend with me.

Tim