Madiston News

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Digital Lending - Buy or Build your Loan Management Software?

 "Buying versus building" online direct lending software - the dilemma facing financial services firms looking to meet the speed and service that Millennials and GenZ will demand from their loan provider.  So what are the considerations for each and which should win the battle for precious IT budget:


No doubt the approval stage of your digital lending concept plan has already taken forever.  Now you're ready to get started...

Speed to market - Build?

First consideration: how long will it take you to:

  • analyse the detailed requirements and specify your lending system
  • present your proposals to management, finance, compliance and IT development teams
  • modify and amend the lending model until consensus is achieved
  • deploy many developers to build the complex loan transaction controls needed, test and re-test

...launch in 12-18 months?

Speed to market - Buy?

If you found a trusted digital lending software partner (like Madiston), how long will it take you to:

  • agree configuration of platform settings to match your lending model
  • test the configuration works for your aims

...launch (depending on your configuration) in 90 days?

Score: Build 0 Buy 1


Which is the route that is most likely to deliver such a transformational lending product, on-time, on-budget and with your reputation intact...

Risks - Build?

Do you and your team have the skills and experience in-house to:

  • analyse and specify a new digital lending environment
  • develop and test a new, complex, high volume transaction system
  • ensure the controls are in place to meet regulatory compliance?

Even the FCA have said that many firms have underestimated the complex systems required so there is a significant risk of project over-run.

Risks - Buy?

Does your trusted software partner (like Madiston) have:

  • Loan management software already proven in live sites
  • track record in delivering FinTech
  • knowledge and hands-on experience of Peer to Peer Lending and the FCA regulatory environment?

If the system you're buying has been successfully delivered and supported elsewhere, then your decision to buy is easily justified.

Score: Build 0 Buy 2


If you look at the digital lenders in the market today that have built their own systems from scratch you will find eye-watering sums have been invested to date...

Cost - Build?

Have you included in your 5 year costings:

  • opportunity cost when your team could be deployed on other projects
  • recruitment of people to supplement the skills and experience in your team
  • inevitable changes needed as you scale up your operations
  • rolling-out your system into other regions with multi-lingual, multi-currency needs
  • adding new products, market changes and new regulatory requirements?

The cost of running and supporting critical software in a regulatory environment is well known and the cost of getting it wrong is more.

Cost - Buy?

Will you know the costs of your bought online lending system up-front including:

  • fixed licence and support costs
  • adding the new products defined in your growth plan
  • the automated upgrades for minor regulatory or market changes
  • shared cost of development of any major regulatory or market change?

Having this information up-front enables you to budget more accurately and why bear the burden of industry-wide changes on your own?

Score: Build 0 Buy 3

Overall conclusion

Find a trusted partner (like Madiston) for your digital and marketplace lending that can quickly deliver a system at less cost and less risk, that is proven, gives you the ability to add your "extra value" and keep up with your growth plan.  We might be biased but the logic stacks up!

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