Today community financial institutions are increasingly relying on third party vendors for critical software, products and services. Regulations repeatedly make it clear that the use of third party vendors or service providers does not reduce the responsibility of your financial institution to ensure that data is safe, secure and complies with all applicable laws, regulations and security best practices. Often this is accomplished through a vendor management function within your bank or credit union.
It is more important than ever for financial institutions to manage their vendors, but many struggle with the best way to efficiently and successfully accomplish this. Until recently, most intuitions had only a handful of managed vendors, which could be tracked manually via a spreadsheet. While this may have worked in the past, regulators now expect all vendors to be risk assessed, easily overwhelming the manual process. In addition, spreadsheets provide no proactive alerting mechanism for expiring contracts and upcoming vendor reviews. They also do not provide the ability to collaborate across the organization and make producing management reports and documentation challenging.
Banks and credit unions should strongly consider the benefits of automating their vendor management functions using vendor management software designed specifically for the requirements of financial institutions. Implementing an automated solution for managing vendor relationships saves a tremendous amount of time and virtually eliminates compliance headaches.
Centralize critical vendor management data
Having an automated system in place helps ensure all vendor information such as contracts and audit reports are located in one place. A centralized location provides financial institutions a way to efficiently manage multiple vendors and all the activities involved in managing a vendor relationship; from assessing the risks, to evaluating controls. It also ensures easy access for all those within the institution who are involved with managing the relationship. The ability to assign multiple vendor managers is an important feature for institutions struggling with the burden of addressing a greatly increased workload.
Use technology to manage the vendor management process
An automated online alerting feature ensures all bank and credit union stakeholders are notified of important key dates, including contract renewals (including auto-renewals), upcoming vendor reviews and annual Board reviews. It offers a comprehensive, up to the minute summary of the vendor relationship and ensures your financial institution is alerted to significant dates and all required activities.
Automate reporting and documentation processes
Automated systems also make providing proper documentation and reports to regulators a lot easier. In order to comply with newly implemented FFIEC regulations, every bank and credit union must be able to provide proper documentation on the monitoring of its vendor management program. Automated solutions provide reports that include a comprehensive inventory of vendors, due diligence results, contracts, risk management reports, reports to the board of directors and management committees.
Automating vendor management functions not only saves time but also helps with ensuring your financial institution is in compliance with all the increased regulatory expectations and guidelines now in effect around vendor management. Ultimately, it is your financial institution’s responsibility to protect your customers and members and their sensitive data. An automated vendor management solution is a very effective tool for not only properly managing the process, but providing the necessary proof in the form of documentation to all stakeholders – management, auditors, and examiners!