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Out-of-the-Box vs Custom vs Configurable Software: What’s for Lenders?

These days almost every lender or credit union needs to automate their credit-granting processes to meet customer needs. Hence they face a challenge - purchase of an off the shelf software or invest money in one and only solution. OOTB might be crowded with functions, while custom development time is far too long. The alternative is configurable software that solves both issues, but does it fit your business? Let’s discover three software types to reveal their pros and cons. 

Out of the Box Software

The box software is a ready-made program with basic functionality. It is a commercial product targeted towards a large or worldwide audience. Box softwares can handle the standard processes either of a business domain or the entire industry. It requires minimal effort to install it and no technical experience at all. 


  • Out of the box is the most inexpensive software type on the market. Designed for a specific audience and domain, it has a fixed functionality at an affordable price. Its development expenditures are distributed across a broad audience allowing you to get an app ready to install. 

  • OOTB solutions are developed based on market analysis and customer needs. Such software is function- and feature-rich which may or may not capture your business requirements. 

  • Support and constant updates are often included by out of the box ventures or can be added within a maintenance contract. You don’t need to contact a development team every time your software becomes obsolete. 

  • Being a widely used solution, the software might have a huge user-base. Worldwide user ecosystem means lots of communities and forums across the internet with self-support and user tips. 

  • Unlike other software types, OOTB needs minimal effort to set up and deploy. You just need to install it and configure what reduced its time-to-go to days. 


  • Yet the box software has a lower up-front cost, you will pay more than originally expected. The initial price doesn’t include software upgrades, installation, support and maintenance, license fees, small customization, and configuration if needed. Hardly you can handle all these processes without a tech-savvy specialist. As a result, these fees might over your budget and excess the costs of customized or configured solutions. In addition, there are high software customization costs or no options to customize software at all.

  • OOTB software is likely to provide features and functions that are not wanted. Being crowded with unnecessary functions, the box software might complicate and slow down your work. Besides, you will pay for software with the functionality you don’t use. 

  • Most out of the box solutions will not fit your company. Imagine that you have established work processes that drive revenue. Introducing out-of-box, you will have to adjust your processes and train staff to work with the software. Pre-realized processes and functionality won't match the way you do the business. So it will cause additional expenses to retrain employees and slow down the work.

  • Being a large-audience solution, OOTB software might include security and technical solutions that are contrary to internal business guidelines or business conditions in your country. 


When OOTB is a perfect fit? Choose boxes software, if you are at the beginning of your business path and need functional software for a while. This software is also perfect for lenders with ordinary business processes on the basis of which such software is created.


Custom-Made Software

Business owners choose custom software when they need more than a standard functionality. Having defined your goals, needed functionality, and business processes, you understand the perfect-fit solution for your company. So you hire a software development team to create a custom solution to meet your business needs. 


  • Bespoke software has all functions and features your business needs. It fastens your work and processes since you don't get stuck into trash options and don’t face long app loading. Moreover, you won’t need to change your processes and retrain staff, because custom is made to fit your business, rather than the reverse.

  • Instead of spending a lot of your budget to update the software every time, you can create a solution with basic functionality and customize it as your business grows. For example, you can start with a loan origination software and then customize it into a full-cycle application. Besides, custom software can be easily integrated with CRM, ERP solutions, payment services like PayPal, Google Pay, and more. 

  • Custom software often comes without additional license fees. You might pay more for an upfront solution, but in the long term, you can save a lot by avoiding monthly or yearly license fees and updates. Also, custom programs won’t have to be replaced by a more dedicated one in a few years. 

  • Bespoke software belongs to your business and is 100% under your control. So to make some changes, you don’t need to wait for weeks on feature requests. You work directly with your development team. 


  • The biggest disadvantage of bespoke software development is time to market. While to start utilizing out-of-box software you need days, custom programming usually lasts from months up to two years. Besides, development costs are high and might not be affordable to small business owners. 

  • It’s really a challenge for business owners to find a reliable software developer. Your software partner should understand your business processes, have a high level of technical knowledge, and a list of successfully completed projects and reviews from customers. 

  • You need tech-savvy specialists in your team to monitor the workflow of a software and solve any appearing bugs. Instead, you can also closely cooperate with the development team every time something goes wrong, which is price-consuming. 

  • A unique software means no user community to provide tips and share the experience. Direct relationship with vendors is a must here. 


When custom is a perfect fit? Bespoke software is not for everyone. This software type is good for banks and large-scale lenders with established business processes.


Alternative Development - Configurable Software

An alternative or configurable system balances OOTB and custom developments. A vendor has a set of prebuilt components or modules that can be adapted to specific business needs. Developers don’t create software from scratch, they build software around a ready-made core configuring it according to your business processes. 


  • Configurable software is truly a golden middle since it costs far less than custom but the same feature-rich. Moreover, it takes from two to four months from onboarding to market release and usually doesn’t require any license fees. 

  • The same as custom software, a configured solution is developed and designed according to your business processes and doesn’t slow your staff down. Such programs can be integrated with core banking software, scoring providers, payment systems, API, etc. In addition, you also can start with only loan origination software development, and then add debt collection and loan servicing. 

  • One of the main benefits is that configured software is often developed by narrow-focused companies. It means that developers, for instance, work only with lenders, banks, and credit unions. They have a deep understanding of lending processes and are experienced in the same field projects which they can demonstrate. 

  • Configurability requires close cooperation with vendors. If you decide to add some functionality, fix appearing bugs, upgrade an architecture, direct cooperation fastens the process. 


  • Amid out the box, configured software needs more money and slightly more time for development.

  • You need to find a really dedicated and experienced team to get what you want. Working with a company targeted at a wide range of solutions and business domains, you risk getting software with poorly established processes. As a result, you will need to hire another company to recreate it or develop again. 

  • A configured software also means no user community to discuss any possible issues, work tips, and bug fixes. However, reputable vendors provide additional consulting services.


When configured is a perfect fit? Configured software is the best choice for SME lenders and credit unions who need a software with unique functionality in the short term. 


Which Software to Choose? 

It’s impossible to develop a one-size-all-fit solution as well as say that out of the box software is worse than any other alternative. Every product has its customer, and the goal of a customer is to find a solution to meet user expectations. If you are only at the beginning of your business path, OOTB is an ideal launching pad to understand how you want your lending processes to work. 


When you are an experienced lender and want a software to empower existing workflow, out of box is not for you. It’s better to consider custom programming or configured software regarding your business scope, budget, and development terms. 


Comments: (4)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 13 January, 2021, 13:051 like 1 like

By "Out of the Box", I think you mean "Commercial Off The Shelf" (COTS), which typically refers to onpremise software. 

"configurable software" normally refers to the activity of configuring a COTS software. What you probably mean is "Component Based Solution Assembly" software or "assemblable software".

With that bit of housekeeping out of the way, I'm curious to know why your post makes no mention of SAAS, which has arguably been the hottest category of software in the last 5-10 years. It promises to eliminate one of the major cons of COTS, namely, hassles and cost of maintenance, updates, etc.

Dmitry Dolgorukov
Dmitry Dolgorukov - GiniMachine - Vilnius, Lithuania 14 January, 2021, 12:49Be the first to give this comment the thumbs up 0 likes

Hi Ketharaman! I'm glad my considerations resonated with you, and that you have a lot to say.

I like the way you define the software types. As we talk about financial software, there are lots of complete and incomplete synonyms (like ootb and cots), as well as detalizations and simply more frequently used vs less frequently used notions. And sometimes picking the right definition for a product is a trap. 

I decided to single out three types according to the development (not deployment) model: custom (from scratch), ootb (readymade), configurable (combining the benefits of these two). According to this classification, SaaS would come in the second column I guess. Although, it very different from COTS deployed on-premises, you are totally right.   

You gave me some food for thought with this "configurable" vs "assemblable" - however, in the case with my HES FinTech platform, I would say we offer configurable rather than assemblable, because it is more than a list of modules you can include or exclude - we offer a higher level of tailoring and meet very specific needs. Sure, there are vendors out there, who provide assemblable solutions. I know cases where they may be the right fit for some businesses, too. 

Actually, any classification can be indistinct, so I really understand what you are talking about. I could write a separate article about SaaS, and the only reason why I didn't mention it here - I tried to be brief. Also, it's not my main interest. 

But I would be pleased to read your thoughts about it. A new blog post maybe?) Hope I'll get a chance to read it and leave my comment. 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 14 January, 2021, 13:591 like 1 like

@DmitryDolgorukov: TY for your detailed response. I write regularly on SAAS on my company blog. I write only about finserv tech on Finextra. If I think of a topic at the intersection of Finserv and SAAS, I'll post it on Finextra. 


Dmitry Dolgorukov
Dmitry Dolgorukov - GiniMachine - Vilnius, Lithuania 15 January, 2021, 13:29Be the first to give this comment the thumbs up 0 likes

Can't come up with such a topic - spontaneously, but if you find one, I'd be glad if you share your thoughts, Ketharaman. Let's keep in touch!

Dmitry Dolgorukov

Dmitry Dolgorukov



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19 Mar 2018


Vilnius, Lithuania

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