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Buy vs. build: The 4 things fintechs must consider

7 Min Read

$408 billion

Global fraud is off the scale. In the next 10 years, losses from payments fraud are expected to top $408 billion – and that’s just one type of fraud. Fintechs are especially vulnerable to fraud, with affected brands facing the prospect of financial and reputational loss.

Fraudsters behave like agile and dynamic organizations: changing their attack patterns and techniques with bewildering frequency. Responding to fraud after it happens is like locking the stable door after the horse has bolted: you need to keep one step ahead. The good news is that you can turn technology to your advantage. Machine learning-driven decisioning engines are key to tackling existing and emerging fraud threats.

But that leads us to the age-old software question: buy or build?

Why shouldn’t you build a solution in-house?

Looking to tackle this problem in-house makes sense on the surface, but not once you dive deeper into the requirements. Building your own fraud prevention solution means you’re in charge of the development cycle. You can tailor the platform to the threats and risk levels of your business.

The problem is fraud moves quickly. The nature of attacks constantly evolves, and so do the techniques used to evade your defenses: which means a constant cycle of development for your team. Then there are often-unforeseen issues with running things solo, such as:


Delays associated with building the platform that can leave you exposed

Resource headaches as you scale and need more engineering time

Icon Insights

Reliance on limited insights from within the business


Siloed systems and disjointed data pools which weaken your overall defenses

How to find the right fraud prevention partner

The more common approach is to invest in an existing fraud prevention solution. This gives you the advantage of high speed to market, without the drain on your resources of building it yourself. The advantages to using dedicated expertise for fraud prevention are many, including quick rollout and 24 x 7 access to dedicated, specialized knowledge and expertise.

However, the most compelling reason is the comprehensive range of protection provided. The right partner can detect a wide range of fraud scenarios in real time and proactively push this intelligence to fintechs, allowing immediate reaction to neutralize threats before they create any real damage. It can also provide ongoing guidance and counsel on how to detect and prevent different types of fraud.

Here are some criteria that may help in selecting the right anti-fraud partner:

  • Can it evolve quickly to match new fraud threats?
  • Is the pricing model cost effective?
  • Will you have access to extensive crowdsourced insights?
  • Can it consider your whole customer’s journey?

Let’s look at each of the issues highlighted above in turn and how buying rather than building can save you a lot of pain.

1. Mitigate fraud risk in weeks, not months

There are no two ways about it: buying a solution will be faster.

With the right partner you can reduce fraud risk for your business in a matter of weeks, not months. At the speed at which fraud moves, this is not an insignificant consideration.

If you choose to build, you run the risk of still getting the basics up and going while fraud runs ahead of you, causing major damage to your business. By the time you’ve created it, fraud tactics will have evolved beyond your solution’s capabilities. And what’s worse, this issue will persist, creating a vicious cycle of catch-up.

The other advantage of buying is time-to-market–in other words, the ease with which you can implement the solution. A good fraud prevention partner will be able to quickly customize their solution to your requirements, helping you roll out with the minimum amount of disruption to your business.

2. Investment without the hidden costs

It’s no surprise that building your own solution will be an ongoing drain on your resources, both financial and operational.

After all, it’s not just the building cost you need to account for, but also the ongoing maintenance and updates. Your solution will need to keep evolving to integrate different data silos and adapt to your business growth, otherwise it will quickly become obsolete.

So, when it comes to cost, buy is the clear winner:


Pay for what you need, not for the entire infrastructure of your fraud protection


Scale as you grow and reduce upfront costs


Maintenance and updates are taken care of, all you need to do is focus on taking action

3. Advanced analytics beyond your business

Building your own fraud risk management platform gives you in-depth access to your own data. Unfortunately, that’s not the whole picture. At the rate of fraud’s evolution, you need to look beyond your internal data to combat it effectively.

Whereas if you buy a solution, you will drastically improve risk mitigation by capitalizing on all available data, including crowdsourced insights and best practices.

And the good news? Access to advanced analytics means an improved customer experience and a reduction in churn. With 71% of customers less likely to trust a fintech service that’s been hit by any type of fraud (link to report landing page) companies need all the insights they can get.


The Pi difference: Protecting the entire customer lifecycle

Paytm Intelligence, Pi for short, was originally created as our in-house fraud risk management solution at Paytm. So, we are well aware of the challenges of building your own platform.

This is why we’ve decided to share our recipe with the world.

Our machine-learning-driven decisioning engine allows businesses to safely onboard more users. Instead of playing catch up with fraud, you can focus on business growth.

Future-proof your fintech company

Through machine learning, we continuously monitor user activity across the entire customer lifecycle, readjusting risk scores and recommending updated rules and policies to be applied. Execution of rules can be used to restrict settlement windows, apply money movement limits, and apply additional authentication steps for certain users based on their profile.

Our solution is highly configurable, so you can tailor rules to fit your current and future business use cases, such as new markets, verticals, or payment types. As your business scales, we evolve with you.

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