You’ve likely picked up on the growing concerns of regulatory agencies surrounding financial institution’s management of their third party vendors. These concerns are well-grounded and will become more crucial as time passes and technology continues to advance.
Vendor management is a discipline. It can be overwhelming to figure out how to tackle a complete vendor management program. Perhaps your team doesn’t have time to define and learn all of the new processes, systems, etc. Maybe your budget doesn’t immediately support a complete toolset to help you keep it all together. These are all valid arguments, but the risks are real.
Challenges and Opportunities
Whether you’re in banking or another line of business, the same challenges and opportunities exist.
Consider the following thoughts:
- New technology is being introduced to the market at unprecedented rates.
- Consumers expect businesses to deliver goods and services better, faster and cheaper… and online, anytime.
- Technology enables businesses (including banks) to continuously improve operating costs, efficiency and point of sale/delivery options.
- The inherent result for any business is a growing dependency on third-party providers to deliver the technology needed to meet the demands.
How well does your institution (or business)….
- on-board new technology?
- replace a vendor?
- track the performance of your vendors or partners?
- ensure you’re renegotiating price agreements at each opportunity?
- evaluate the (ever-changing) risks involved in each outsourced function?
- understand where your vendor’s controls stop, where your own controls pick up and how to address any gaps in between?
- implement control structures to mitigate the risks of the total function?
- devise annual plans for improvement in your critical vendor relationships?
Defining your plan for vendor management
The great news is there is an easier way for you to build up your program, one small step at a time. The most important step you can take is to define your plan for taking your vendor management program from wherever you are today to one that you will be able to rely on in the future.