The Build Versus Buy Debate in Financial Crime Compliance
The agricultural revolution over 10,000 years ago transformed human history by enabling specialisation. Once farming produced food beyond subsistence needs, people were freed to become toolmakers, builders, scribes, or artists. This shift boosted productivity, sparked innovation, and fostered cultural development, giving rise to the first great civilisations in Mesopotamia, Egypt, India, and China.
History shows that specialisation drives progress – but is it always better to rely on specialists, or to build what’s needed ourselves? Although the question of build versus buy first emerged during the industrial revolution, it is still hotly debated today, particularly in the financial crime compliance (FCC) community.
The Rising Technology Spend in Banking
Gartner estimates that banks will spend $466 billion on technology globally in 2025, an amount that will continue to rise 9% per year to 2028. Technology-forward banks spend as much as 16% of revenue on technology, non-tech banks as little as 3.9% of revenue.
With investment in technology increasing as the race to remain competitive heats up for banks of all sizes, which strategy will deliver the most value: building tech solutions in-house or partnering with specialised third parties for specific solutions?
The benefits of developing FCC systems in-house
The strongest arguments in favor of building technology in-house rather than partnering with experts are found in the area of customisation and control.
They include:
Tailored to risk appetite
Technology solutions that are built in-house can be tailored to the institution’s risk appetite, customer base, and product mix.
The flip side: when any or all of these elements change, tech solutions built in-house must be flexible enough to be able to adjust to change accordingly, or risk becoming obsolete.
Fit-for-purpose AI models designed for constantly evolving financial crime compliance incorporate Continuous Learning Loops that allow models to adjust to changing risk profiles, regulatory demands and customer behaviour. These models don’t need rebuilds. They are constantly updated and maintained so they continue to perform.
Control
Technology designed in-house offers full control over rule sets, machine learning models, data integration, and workflow design, all critical elements in the build-vs-buy debate. In fact, data integration is often the deciding factor when companies are considering outsourcing technology solutions. Fragmented datasets scattered across legacy systems can make mapping into vendor platforms challenging without costly customisation. Building in-house offers tighter control and alignment with legacy infrastructure. Often there is strong interest among internal stakeholders to maintain existing infrastructure.
Internal alignment
Easier alignment with unique internal processes and governance structures. Internal processes and governance structures differ significantly between institutions, shaped by their business mix, history, culture, and regulatory context. This diversity is exactly why build-vs-buy decisions in FCC are rarely uniform – what works well for one financial institution may miss the mark for another.
No middlemen
When technology is built in house, the builder owns all costs, those that are planned and budgeted, and the “unfavourable variances” that signal costs that have come in unexpectedly high.
Competitive differentiation
Buying technology from specialist firms denies the would-be builder the chance to cultivate competitive differentiation that could help set it apart from the rest of the market.
Compliance can become a strategic advantage if in-house systems detect risks better or more efficiently than competitors, or are more agile or faster adopting to changes in regulation, customer behavior or risk scenarios. For example, proprietary models and analytics may reduce false positives, speeding up customer onboarding and improving customer experience.
The flip side: competitive, fit-for-purpose AI solution providers can achieve the same goals at competitive cost.
Data Security and Sovereignty
Outsourcing technology can expose firms to data privacy and security risks, including breaches, loss of control, and regulatory non-compliance. Cross-border data transfer issues, vendor vulnerabilities, and concentration risk heighten exposure. Limited transparency can also challenge auditability, making it harder for firms to demonstrate compliance and maintain regulator and customer trust.
When technology is built in-house, sensitive customer and transaction data stays within the institution’s environment, reducing third-party risk and easing regulator concerns about outsourcing critical FCC functions.
The flip side: AI solution providers with a proven track record have established credibility in data security and sovereignty.
Benefits of Buying FCC Solutions Through Third Party Partners
The speed, proven expertise and scalability that specialised third parties for FCC technology offer can be critical in an environment of rising regulatory pressure and intensifying competition.
Speed of Deployment
Regulatory obligations sometimes have a date by which banks must be compliant. Speed of deployment can be an important advantage of third-party financial crime compliance solutions. Third party AI solutions for financial crime compliance that have been designed to integrate seamlessly with existing systems to carry out transaction monitoring, name and sanctions screening, or KYC can be implemented far more quickly than in-house builds, accelerating compliance readiness and reducing regulatory risk. This can be a critical advantage for institutions under immediate regulatory pressure.
Proven Expertise and Innovation
The providers of AI solutions for FCC with a proven track record of service to multiple institutions, like Silent Eight, offer the advantage not only of expertise, but systems that have already been developed and fully vetted, and a broader view of typologies, regulatory trends, and best practices.
Specialised firms are constantly conducting research and development. By partnering with these firms, banks access innovation without carrying the full burden of development costs.
Costs
Buying technology solutions typically reduces the heavy upfront investment associated with in-house builds, including recruitment of specialist teams and infrastructure costs. Instead, expenses are spread through predictable licensing or subscription models. This structure offers greater budget clarity, enabling institutions to manage compliance costs more effectively while still accessing robust, industry-tested tools and ongoing vendor support.
Nearly 40% of banks’ IT spend is in human capital. Meanwhile, a recent PwC survey found that the wage premium for workers with AI skills has risen 56% this year, up from 25% last year. Systems built in-house commit the institution to constant competition for tech talent.
Key-person risk
In-house development usually hinges on the work of one or a few people. If they leave the organisation, then the knowledge of the solution leaves with them. Vendors mitigate key-person risk through rigorous documentation of code, models, workflows, and client configurations. Furthermore, standardised implementation playbooks and onboarding processes allow others to step in quickly if a staff change occurs.
Regulatory Credibility
Established vendors often provide solutions that have been widely tested and validated across multiple jurisdictions, giving them a strong track record with regulators. Using such “industry-standard” tools can reassure supervisors, reduce scrutiny, and demonstrate a commitment to recognised best practices – advantages not always guaranteed with unproven proprietary builds.
Maintenance and Scalability
Vendor solutions ease the maintenance burden by handling updates, patches, and model optimisation, allowing institutions to focus resources on core compliance priorities. Cloud-native platforms further enhance scalability, enabling rapid global deployment across multiple entities – an advantage over internal builds often constrained by legacy infrastructure and slower upgrade cycles.
Maintaining Focus
When firms build technology in-house, scarce resources such as capital, talent, and management attention, may be diverted from core business and customer services. This can dilute strategic focus, slow growth, and weaken competitiveness, especially if technology development becomes a distraction rather than a differentiator in delivering primary business value.
In the end, there is no one-size-fits-all answer.
Building offers control, continuity of legacy infrastructure and differentiation, while buying delivers speed, expertise, and scalability. The right choice depends on a bank’s strategy, risk profile, and resources. At the core of every decision, however, is the question: what will deliver the most resilient, effective compliance now and in the future?
