5 Third-Party Risk Management Best Practices for a Fintech Provider
Third-party risk management best practices for fintechs.
As a fintech provider, your third-party risk management process will become well-developed and more organized by following these 5 best practices. In turn, your clients will feel much more at ease when selecting you as their preferred vendor of choice to continue doing business with. It’s a win for both parties. Listen now.
Hello everyone and thank you for joining me today for our Third Party Thursday podcast. I’m Alicia Thomas, Senior Relationship Manager here at Venminder.
In today’s discussion, we will touch on the third-party risk management best practices for a fintech provider to know. First, let’s start with a better understanding of what a fintech provider is.
A fintech provider is a technology company used to support or enable banking and financial services functions. The fintech provider is a financial institution’s third party vendor. Whether you are a financial institution or if you’re a fintech provider, our recommended best practices for a fintech company include:
- Understand the regulatory expectations. The better you understand your client’s process and who their regulator is, the more you can research the guidance and improve your third-party risk management internally to meet their expectations. You should then be one step ahead when you receive a due diligence request from an institution.
- Keep in mind that as an institution’s regulatory expectations increase so do your requirements and obligations. It’s a constantly evolving space with more and more rules and regulations being implemented.
- Create your own third party risk management practices. With the introduction of the SSAE 18 on May 1, 2017, there is a good chance you’ll need to report the significant vendors you use to conduct business. These are the institution’s fourth parties. It’s a good call to go ahead and have procedures in place around due diligence on your third parties. This includes, contract management, risk rating vendors, evaluating vendor performance and more.
- Understand the third party risk management language. Study and learn the lingo as much as possible. This will help you to further understand your clients and also the framework around your own third-party risk management policies and procedures. Some guidance that I’ve found to be extremely helpful includes:
- Evaluate your complaint management procedures. Are they in line with the institution’s expectations? The CFPB has placed great emphasis on the importance of complaint management.
As a fintech provider, your third-party risk management process will become well-developed and more organized by following these best practices. In turn, your clients will feel much more at ease when selecting you as their preferred vendor of choice to continue doing business with. It’s a "win" for both parties.
I hope you found this podcast helpful. Again, I’m Alicia Thomas at Venminder. If you haven’t already done so, please subscribe to our Third Party Thursday series.
Subscribe to our Third Party Thursday Newsletter
Receive weekly third-party risk management news, resources and more to your inbox.