Acquiring an employee compliance solution has typically been presented as a binary choice: build or buy? In this blog, we revisit each approach's main pros and cons and show why the two are no longer mutually exclusive, with hybrid solutions combining the best of both options.
WHO BUILDS AND WHY?
For large firms with the requisite budget, expertise, and staff, building an automated compliance solution in-house might seem like the logical, most effective way to ensure the business and individual employees have the tools they need to meet their regulatory obligations. And if the firm’s integration requirements are unique or somewhat unusual, building in-house might seem like the only way forward.
When building in-house, the firm benefits from:
- A dedicated development team
- Relevant expertise in a range of domains
- Platform ownership
- Potential flexibility
THE DOWNSIDE OF BUILDING
However, these benefits come at a price: complexity, and the cost of maintaining that complexity and unique system profile over time. This could potentially run into hundreds of thousands or even millions of dollars when interdepartmental charges, ongoing maintenance and support costs, software licenses, costs for servers, racks and routers, and user training are all factored in.
The budget must be able to accommodate future changes in requirements, while the firm’s collective expertise will need to be insulated from employee churn – what happens if key members of the development team leave the company?
In-house systems can be tailored to the specific environment of the firm, but that uniqueness will have to be easily explainable and demonstrable to third parties – including regulators and partners – that have little knowledge of the internal workings of the in-house systems.
THE BENEFITS OF BUYING
Buying a solution from a vendor unlocks the power of crowdsourcing: the combined input of dozens of companies and hundreds of compliance officers facing the same or similar regulatory requirements and migrations gathered over the years.
Using an established vendor means the platform will have been tried and tested countless times and is likely to be understood more easily by auditors, who will have already encountered the platform when auditing other firms. Quality SaaS vendors have industry, product, and implementation experts on staff to help guide clients, who do not need to spend time educating their own internal IT teams. The investments made by vendors in regtech allow in-house teams to direct their budgets and resources to other priorities.
Additional Benefits from buying from a trusted regtech vendor:
- Freedom – reduce the burden on your teams' shoulders
- Continuous product development and support
- The power of the crowd and competition
- Innovative features that a single organization might not have identified
- Predictable costs, economies of scale, and fast-turnarounds
- A platform easily understood by auditors
Before deciding to buy, it’s important to know that, while an off-the-shelf solution might solve the firm’s employee compliance challenges for the most part, it may not necessarily solve all of them. Ultimately firms will have a complete understanding of their organizations' individual challenges and requirements. As they vet vendors, they’ll want to ensure that the solution meets all their needs. They must be fully aware of what the vendor will and won’t do for them – now and in the future.
COMBING THE BEST OF BUILD AND BUY
Building and buying no longer have to be mutually exclusive, with hybrid solutions combining the benefits of each option. This route to employee compliance automation allows the firm to:
- Combine the vendor’s regtech expertise, knowledge of the marketplace and understanding of the regulatory landscape, with the firm’s technical capabilities to augment its systems – e.g. with the addition of low code or no code solutions that bridge the gap between what the firm has today and what they need to meet current and future regulatory demands
- Gain the ability to react quickly to new regulations and market events, and prepare for future regulatory developments with regular, automatic updates to content and regulations.
- Pave the way for productive relationships with regulators and can help drive a culture of compliance throughout the organization.
Integrating a third-party SaaS platform into its existing systems can complement the firm’s own compliance program and take it to the next level.
To learn more and ensure you’re not forgetting anything as you begin the process of finding the right employee compliance automation for your firm, read our Q2 2023 Executive Brief, and download our comprehensive Build vs Buy Checklist.