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What to build, buy or partner in fintech? 90% of the time it’s the wrong question.

We see a lot of posts and articles about GTM strategy in fintech. Inevitably they all jump to the executional questions of build, buy or partner. In our experience advising fintechs on launching a payments offering we find that they have often failed to answer strategic questions and appropriately develop a plan of attack. Instead, they jump right to the tactics (often in the wrong sequence), which leads to a lack of successful execution, leaving them with poor investment choices, a lack of meaningful solutions, and/or no other choice than to exit the space. Payments is highly lucrative but here are no shortcuts. You MUST be willing to do the hard work.

While you need a bold strategy to take advantage of the opportunity, that strategy must exist within a broader shift in strategy at the enterprise level. Companies that fail to map out their strategy will not be able to deliver a sustainable and defensive solution that can scale and drive value for the organization.

Once the strategic questions are answered then Fintech players can plan what to build, buy and outsource. It's going to be a rare situation where a Fintech is prepared to be vertically integrated, and while many are currently posturing about obtaining a bank charter, that is not an easy path, fraught with regulatory requirements and demands.

The payments ecosystem has more roles and responsibilities than most people anticipate, and they can be taken by surprise when they recognize that what they are trying to build does not fit with the structure, or lack of structure, that they have established. As a general rule we advise:

• Buy talent; people are your greatest assets

• Build to showcase your core capabilities

• Buy services that you need from experts

Never forget that most change efforts fail unless companies adopt a transformation mindset, garner organizational buy-in and commit to the leadership behaviors required to drive and sustain the transformation. Too often the team is just thinking about payments as a new product or division and don’t recognize that adding payment capabilities will fundamentally change the enterprise. You must identify the organization’s state of readiness and ensure the enterprise is aligned to take on these changes with the organizational architecture in place to support it.

In a recent webinar about unlocking the value in payments we talked about “slowing down to speed up. “If you take the time to develop your strategy, organizational readiness and roadmap for execution up front, you can avoid some predictable pitfalls. Fintechs are savvy in marketing as well as product and technology innovation. They are also agile and fast-paced. When they enter the market with a clear vision to leverage their strengths, they win. They allow the banks to issue, processors to provide gateways and the networks to settle transactions. Fintechs can focus on developing new and faster services often around themes such as financial literacy, financial stability, financial health and ultimately financial freedom that so many Americans are unable to achieve on their own. The playbook for how to become a payments provider has existed for a long time; if Fintechs can swim into that structure they will get the return that they deserve.


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