Building Competitive Advantage: The Evolution of Buy and Build in Financial Technology

Key Takeaways

Buy and build in financial technology gives capital markets firms a practical way to balance speed, control, and differentiation. By combining standardised vendor components with proprietary enhancements, firms can avoid the limits of monolithic systems, improve interoperability, reduce time to market, and build more agile technology architectures.

Last week The Broker Club held their annual conference The Future of Broking at the America Square Conference Centre in London. The Rapid Addition team was proud to support the event and contribute to the panel discussion “Buy and Build – Breaking the Cycle”. It shed light on the dynamic landscape of technology adoption in the financial sector. Moderated by Steve Grob, the panel featuring Mike Powell (CEO of Rapid Addition), Will Winzor-Saile (Partner at Redburn Atlantic), Jon Butler (CEO of velox), and Paul Whenham (Regional Head of Equities Product at ION Markets), explored the nuanced strategies of buying and building technology solutions in today’s market. This article provides a summary of the discussion and the main takeaways.

Asked by Steve Grob what the buy-and-build approach entails from a fintech vendor’s perspective, Jon Butler, CEO of velox, kicked off the debate by emphasising the perennial dilemma faced by capital market firms: to buy off-the-shelf solutions or to build custom ones internally. Based on his extensive industry background, he highlighted the limitations and challenges associated with both approaches, emphasising the need for a hybrid strategy that leverages the strengths of both paradigms. Butler articulated the concept of “buy and build” as a middle ground, allowing firms to procure standardised components while retaining the flexibility to develop bespoke solutions that differentiate them in the market.

Mike Powell, CEO of Rapid Addition and ex-director at Thompson Reuters, Nomura and Bloomberg, echoed Butler’s sentiments, emphasising the importance of leveraging modern technology to blur the lines between buying and building. Powell emphasised the emergence of modular workflow platforms, such as those developed by velox and Rapid Addition, which offer a middle ground for firms to customise off-the-shelf solutions to meet their specific business requirements. This approach enables firms to accelerate deployment while retaining the ability to add value through proprietary enhancements.

Will Winzor-Saile, Partner at Redburn Atlantic, shared insights from his firm’s experience with the buy-and-build approach, which they embraced years ago. He discussed that it is important for financial services organisations to be able to break away from monolithic vendor solutions and adopt a more agile architecture that allows for seamless integration of best-of-breed technologies. Winzor-Saile highlighted the role of modern technologies, such as low-code platforms and cloud infrastructure, in enabling firms to enhance interoperability and agility in their technology stack. A key message he had for vendors was: “Either help us or get out of our way”, sharing how important it is to embrace a collaborative approach with fintech providers and avoid vendor lock-in.

The panel also discussed the cultural shift required within organisations to embrace a buy-and-build mindset effectively. Powell highlighted the concept of opportunity cost, stressing the need to balance the desire for differentiation with the practical realities of resource constraints and time-to-market pressures. Winzor-Saile echoed this sentiment, urging vendors to align with firms’ business objectives or risk being sidelined in favour of more agile solutions.

In conclusion, the panellists agreed on the need for greater interoperability and collaboration within the industry to overcome the challenges associated with technology integration. Paul Whenham elaborated on the importance of standardisation and AI-driven interoperability solutions to facilitate seamless communication between disparate systems, pointing the key role that the FIX messaging protocol will play in this process. While the path to achieving true interoperability may be complex, the panel expressed optimism about the transformative potential of technology to drive innovation and efficiency in the financial sector.

As the industry continues to evolve, firms must strike a delicate balance between leveraging off-the-shelf solutions for efficiency and building proprietary enhancements for differentiation. By embracing a buy-and-build approach that leverages modern technologies and fosters interoperability, firms can navigate the complexities of the digital age and position themselves for long-term success in an increasingly competitive landscape.

FAQs

What is build vs buy strategy?

A build vs buy strategy is the decision between developing technology internally or purchasing an off-the-shelf solution from a vendor. In financial technology, many firms use a hybrid approach that combines standardised vendor components with bespoke development for competitive differentiation.

What is a buy and build approach in financial technology?

A buy and build approach in financial technology allows firms to procure standardised technology components while retaining the flexibility to build proprietary workflows, integrations, or enhancements around them. This helps firms accelerate deployment without sacrificing the ability to differentiate in the market.

Why are capital markets firms moving away from monolithic vendor systems?

Capital markets firms are moving away from monolithic vendor systems because they need greater agility, interoperability, and control over their technology stacks. Modular platforms, low-code tools, cloud infrastructure, and best-of-breed integrations can help firms adapt faster and avoid vendor lock-in.

Why is buy and build important in capital markets technology?

Buy and build is important because capital markets firms need to modernise quickly without losing the ability to differentiate. Modular platforms, low-code tools, cloud infrastructure, and open integration models can help firms move away from rigid legacy systems while retaining control over their unique workflows.

For firms looking to modernise legacy infrastructure or scale electronic trading operations, an extensible enterprise trading architecture platform provides the foundation for greater agility, control, and long-term resilience. Rapid Addition’s RA Platform enables financial institutions to design, deploy, and evolve sophisticated trading workflows without the complexity of rebuilding core systems.