Evaluating Third-Party Risk Management Software for Financial Services

Financial institutions understand the importance of strong third-party risk management (TPRM). It’s not just about regulatory compliance — it’s about protecting your organization from operational, reputational, and cybersecurity threats.

But managing vendors is getting harder. There’s increasing pressure to onboard vendors quickly, whether to meet aggressive growth goals, integrate new technological capabilities, or respond to evolving customer demands. Meanwhile, vendors are gaining deeper access to systems and data, making continuous oversight essential. The result? A fast-moving, high-stakes environment where traditional approaches can’t keep up. 

That’s where third-party risk management software comes in. The right solution helps financial institutions manage complexity, scale oversight, and keep pace with today’s fast-moving risk environment — all without sacrificing control or compliance or adding more to your plate.  

Let’s explore how to identify the right third-party risk management software and the essential features financial institutions should prioritize. 

How to Choose the Right TPRM Software for Financial Services 

Taking a thoughtful approach to selecting third-party risk management (TPRM) software lays the foundation for a strong, scalable program. Before evaluating providers, clarify what your organization truly needs. 

Here are key factors to consider: 

• Your organization’s priorities: What are you trying to solve? If improving ongoing monitoring processes is a priority, look for tools that offer automated tracking, reporting, and integrated risk intelligence. 
• Regulatory expectations: Financial services companies must meet the requirements of multiple regulators — such as the SEC, OCC, FDIC, Federal Reserve, NCUA, and FFIEC, among others. Your TPRM software should align with these requirements and support audit readiness through features like documentation tracking, due diligence reviews, and contract management. 
• Existing pain points: Identify bottlenecks and challenges in your current process. Are manual tasks slowing your team down? Is it hard to collect due diligence or demonstrate vendor oversight? Talk to stakeholders across departments to understand their friction points. 
• Third-party inventory size and complexity: Whether you manage 20 vendors or 2,000, your TPRM solution should scale with you. Look for risk tiering and segmentation tools that support a risk-based approach to oversight regardless of your third-party inventory size. 
• Cross-functional needs: Bring compliance, risk, IT, legal, and procurement into the process. Their input will help ensure the solution supports enterprise-wide goals and minimizes silos.  

Related: Software and Outsourcing Activities Benefit Third-Party Risk Management at Any Maturity Level 

Must-Have Features Financial Services Organizations Should Look for in TPRM Software 

When evaluating third-party risk management solutions for your financial institution, prioritize solutions that offer these essential capabilities: 

• TPRM lifecycle management: Choose software that supports every phase of the third-party relationship — from onboarding and ongoing monitoring to offboarding. You need full visibility across the lifecycle to manage risk and ensure compliance at every step.  
• Customizable risk assessments: Your institution’s risk criteria are unique. Look for configurable TPRM tools with risk assessment capabilities that allow you to tailor risk assessment questions, scoring methods, automated workflows, and reporting to those needs. The right platform should support risk tiering, track progress, and produce actionable risk ratings. 
• Centralized documentation and evidence management: A single, secure repository for vendor documentation reduces confusion and supports audit readiness. Key capabilities include automated document requests, contract management, expiration alerts, and version control. 
• Audit-ready reporting and analytics: Effective reporting enables better decisions and demonstrates program maturity. The right TPRM software for financial services offers custom reports and dashboard templates to share across teams. It should also provide high-level reporting to share with your board of directors.  
• Ongoing risk intelligence: Continuous oversight is critical. Choose a solution that offers integrated tools like cyber risk monitoring, financial health data, adverse media alerts, and watchlist screening to surface red flags in real time. 
• Subject matter expertise: Not every institution has in-house experts to review SOC reports, BCPs, or other due diligence documentation. TPRM software with built-in access to qualified analysts — and clear findings and recommendations — ensures a consistent approach where nothing gets missed 
• Configurable workflows: Standardize and streamline your TPRM processes with flexible, rule-based workflows. The platform should support task automation, approval chains, and escalation paths to maintain accountability and reduce bottlenecks. 
• System integrations: Your TPRM software should work seamlessly with other tools in your tech stack, like GRC platforms, cybersecurity systems, contract management, and core banking software, to eliminate silos and maintain data integrity. 
• Ease of use and implementation support: Adoption matters. Look for an intuitive user experience backed by responsive customer support, onboarding resources, and ongoing training to help your team ramp up quickly and stay productive. 

Related: Best Third-Party Risk Management Platform Features 

Choosing the right third-party risk management software is essential to keeping pace with today’s fast-moving risk environment. The right solution gives your team the visibility, control, and insight needed to move quickly — without compromising compliance or overextending your resources. 

By knowing what to look for, your financial institution can build a smarter, more efficient TPRM program that meets today’s demands and adapts to tomorrow’s challenges. 

Whether your program is just getting started or maturing, outsourcing to TPRM software can be a game changer. 

Learn the benefits in this eBook.