A bank regulator recently warned that managing third-party risk is a heightened supervisory focus.
The Office of the Comptroller of the Currency (OCC) in its Semiannual Risk Perspective report identified increasing use of third-party service providers and the concentration of critical operations among few service providers as operational concerns.
The report notes a growth in partnerships between banks (you can substitute the term credit unions) and third-party companies or vendors. Financial institutions are becoming more reliant upon third-party financial technology companies for new emerging products and services. This is driving third-party risk.
The report also noted that consolidation — both among banks and among third-party service providers — has “increased reliance on a smaller group of third parties providing critical applications and resulted in large numbers of banks, especially community banks, relying on a small number of service providers.”
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