Executive Summary
To compete for wallet share, financial institutions (FIs) must offer exceptional online capabilities for their customers/members. A frictionless, easy-to-use DAO process is an essential part of the customer experience (CX), and critical to customer acquisition. For this reason, determining whether to build in-house—or instead, to purchase a pre-built platform from a vendor—is a critical choice. Either approach offers distinct advantages and challenges, with far-reaching implications for cost, time-to-market, scalability, and long-term growth.
This article explores the “build vs. buy” question in depth, offering insights to help financial institutions make informed decisions tailored to their goals. While building in-house offers unmatched customization, we conclude that for most institutions, purchasing a proven solution from a trusted vendor is the best choice to ensure speed, scalability, and compliance.
The Digital Account Opening (DAO) Landscape: Build vs. Buy
Why Digital Account Opening is Crucial
Today’s customers expect fast, seamless, and secure digital experiences—whether opening a checking or savings account or applying for a loan. As the first touchpoint in the customer journey, Digital Account Opening (DAO) plays a pivotal role in shaping perceptions and driving conversions.
For financial institutions, this means reducing friction, ensuring compliance, and enhancing security—all while making a strong first impression. However, up to 40% of online applications are abandoned due to clunky or slow processes. To address this, banks and credit unions must adopt efficient DAO solutions that accelerate onboarding and improve conversion rates.
The big question remains: should institutions build their own DAO solution or buy one from a vendor? Let’s explore.
Building an In-House DAO Solution
Pros: Customization and Control
- Tailored Solutions
Building in-house allows institutions to create a bespoke solution perfectly aligned to their processes, branding, and customer needs. This ensures a highly personalized customer experience. - Integration with Existing Systems
In-house solutions can be deeply integrated with internal tools, such as CRM systems, core banking platforms, and fraud detection software, to ensure optimized workflows. - Data Ownership
By choosing to develop internally, institutions retain full control over customer data, ensuring privacy and security.
Cons: High Costs, Delays, and Maintenance
- Expensive Initial Costs
Developing a DAO solution requires significant investment in personnel and resources, with development, testing, and deployment costs often reaching millions of dollars. - Longer Time to Market
Building from scratch is time-intensive. Delays in launching a DAO solution can frustrate customers and result in missed opportunities in a fast-moving market. - Ongoing Maintenance
Maintenance, updates, and adjustments to meet evolving compliance standards require dedicated teams. Without consistent investment, systems may become outdated and vulnerable. - Scalability and Compliance Challenges
Scaling a custom-built solution is often complex and costly—especially during peak traffic periods or product launches. Institutions must also stay ahead of evolving compliance standards and enhance fraud detection capabilities, which require continuous investments.
Buying a Vendor-Supplied DAO Solution
Pros: Speed, Cost-Effectiveness, and Scalability
- Fast Deployment
Pre-built solutions are ready for quick implementation, allowing institutions to meet customer demands and remain competitive without lengthy development timelines. - Lower Total Cost of Ownership
Vendor platforms replace high upfront costs with predictable subscription fees. Regular updates and maintenance are included, reducing internal resource demands. - Built-In Scalability
Designed to grow with the business, vendor solutions handle higher traffic, new features, and larger user bases with ease. - Compliance and Security
Trusted vendors like Blend and Temenos integrate compliance protocols and advanced fraud detection capabilities into their platforms, reducing regulatory risks and ensuring customer trust. - Continuous Innovation
Vendors provide regular updates and enhanced features, allowing institutions to benefit from ongoing advancements without additional effort.
Cons: Potential Limitations
- Reduced Customization
Vendor solutions may not align perfectly with an institution’s unique needs, sometimes requiring that internal processes be adapted to accommodate the platform. - Vendor Dependence
Relying on a single vendor for updates and support may create challenges if the institution wishes to switch providers or customize features in the future. - Ongoing Costs
Subscription fees accumulate over time, necessitating careful evaluation of the long-term financial implications.
Success Story: A Unified Origination Platform
One of the top 100 largest credit unions in the U.S. with $5.3 billion in assets under management, faced a familiar challenge: fragmented systems for deposits, consumer loans, and mortgage originations. To meet their ambitious market expansion goals, they sought a unified origination platform capable of powering their entire suite of consumer deposit and lending solutions.
See the full article here: Blend
Conclusion: Why Buying Often Wins
For most financial institutions, buying a pre-built DAO solution is the clear choice. Here’s why:
- Speed: Pre-built solutions allow rapid deployment, enabling institutions to meet market demands quickly.
- Cost-Effectiveness: Predictable costs and reduced internal resource requirements make buying more economical over time.
- Proven Expertise: Trusted vendors bring years of experience and ongoing innovation, ensuring reliability and industry compliance.
- Scalability: Vendor solutions grow with the institution, accommodating increased demand and new services effortlessly.
- Compliance Assurance: Built-in regulatory features and consistent updates for fraud detection ensure the solution remains current without additional development.
The Fortimize Blend Salesforce Connector helps financial institutions to increase application conversion rates by capturing stalled, abandoned, or declined applications. The Connector creates Salesforce leads from lost Blend Consumer Banking Suite opportunities, allowing teams to follow up immediately. The Connector ensures that customer data is readily available, enabling personalized outreach and effective follow-ups. Sales efficiency is enhanced through increased conversion rates and the overall customer experience is improved by allowing users to resume incomplete applications without having to start all over again.
