Build, Buy, and Partner

September 04, 2018
Beth Devin, Head of Innovation Network & Emerging Technologies, Citi Ventures

Since the early days of industry, business and technology leaders have mulled over whether to build or buy new technology solutions. Developing unique products in-house and purchasing turnkey services from third-party vendors each presents its own set of upsides and downsides, and the rapid innovation in the technology space offers a wealth of options for both builders and buyers to navigate.

As technology embeds itself in every company, it can be useful for businesses to have a framework for when to buy, when to build, and when to partner on technology solutions.


For commoditized or general business needs, buying outside solutions often makes the most sense. While companies at one time had to host, support, and maintain third-party software on their own servers, cloud-based Software-as-a-Service (SaaS) providers now handle most of those responsibilities themselves. SaaS solutions offer so many benefits to the buyer—including reduced cost, robust functionality, and a constant stream of enhancements—that the question for many has become why shouldn't we buy?

For example, Citi's Human Resources (HR) group is currently migrating its information systems to Workday, a SaaS platform. The implementation is set to replace at least eight existing systems, integrating state-of-the-art solutions into Citi's employee productivity ecosystem and leveraging best practices from over 1800 Workday clients to help the bank manage its HR with lower support costs and less complexity. Citi HR Tech leader Jeff Bienstock called moving to Workday "exactly the type of decision progressive companies are making."


While buying can be an effective means of procuring certain solutions, there are still strong reasons to build. Particularly for global, regulated companies such as Citi, developing a proprietary solution can offer vital strategic advantages and improve client relationships. However, it's critical to understand the investment required to operate, support, and extend the life of the products built in house.

Here are three instances of when it may be worthwhile for a company to build:

1. It's core to your business. Every business operation includes both core and non-core activities. Core activities are the ones that differentiate a firm's value proposition to clients.At Citi, consumer banking and lending, markets, investment banking, and trade and treasury services, among others, are core to our enterprise. Our global footprint, local expertise, and wealth of client data offer a strategic advantage that is often best demonstrated through built solutions—such as Citi Velocity, a digital platform for capital markets services. Leveraging proprietary data, Citi Velocity allows authorized users to execute and analyze trades, see live markets, and more. Comprehensive and customizable, Citi Velocity offers our clients a differentiated product that only Citi could build.

2. It's essential to the client experience. Engaging digital products that reduce friction, offer self-service capabilities, and ultimately save end-users time are no longer "nice to have," but are at the heart of delivering an exceptional client experience. These, too, can be worthwhile to own and build, even if a product's back end incorporates third-party solutions. By designing and developing a holistic digital interface, one can ensure that the client experience is engaging, seamless, personalized, and on-brand.For example, Citi FinTech recently launched a beta-testing community called Canvas, which allows clients to quickly test and provide feedback on new features. Citi engineers can then use that feedback to refine those features, designing products and services that better engage our clients and meet their needs.

3. It's a new, disruptive product. Building may be the best option when a company is exploring new products and services, especially when taking on a longer-term, unproven bet. Using design thinking and agile practices, a dedicated product and engineering team can quickly build a minimum viable product (MVP) and begin testing with prospective clients.One way Citi does this is through our internal growth model, D10XSM. Participating in D10X, Citi employees can bring new products to market, co-creating with our clients to solve their pain points and generate new growth opportunities.


While "buy vs. build" is often a clear-cut and binary choice, the hybrid model of partnership can provide more flexibility than buying and greater speed to market than building.Due to the rising popularity of platforms, the ease of API integrations, and the growth of ecosystems, partnerships appeal to many enterprises. Beyond mere integration, however, partnerships represent situations where parties share a certain degree of risk, exchange something of value, and operate with clearly aligned incentives.

In some cases, partnerships may evolve into more formal joint ventures (JVs). JVs allow firms to incubate new companies that can thrive independently while still benefiting from the resources of each parent. For example, Citibanamex entered into a JV with Telcel, the largest mobile provider in Mexico. The JV product, Tran$fer, offers unbanked TelCel customers in Mexico access to a bank account through their mobile phone, and provides discounts and benefits from a growing number of retailers.

The Keys to Innovation

The ongoing shift to cloud computing, the explosion of big data, and the widespread deployment of artificial intelligence/machine learning have transformed the way companies of all sizes build and buy technology, while opening up a range of new partnership models and opportunities. Fortunately, organizations aren't faced with a firm choice between building, buying, and partnering; instead, they can weave all three options into a cohesive solution that works for their business. Projects like Workday, Velocity, Canvas, D10X, and Tran$fer exemplify how Citi is strategically balancing all of these options to foster innovation and drive growth for our clients around the globe.

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