Barclays, HSBC and Morgan Stanley are working with Markit on the creation of a cloud-based network for assessing and monitoring third party vendor risk.
The Know Your Third Party (KY3P) hub, hosted by Dell Cloud Services, will aim to simplify and standardise third party risk management processes focusing on vendor due diligence and ongoing monitoring.
Barclays, HSBC and Morgan Stanley are the first institutions to begin onboarding their third party vendor relationships to the hub.
“Third party risk management processes are bilateral in nature, time consuming and repetitive,” says Michele Trogni, managing director, co-head of solutions at Markit. “KY3P will transform many aspects of third party risk management, and we are very excited with the opportunity to build a network that differentiates key metrics like ‘time to market’ and ‘critical event management’ effectiveness.”
Regulators the world over have become increasingly concerned about the reliance of banks on third party suppliers for critical information systems. In April, a survey of 40 Wall Street firms by the New York State Department of Financial Services found that nearly a third of respondents did not require vendors to notify them if they found a cyber security breach, and fewer than half conducted any on-site assessments of their vendors.
Markit's data hub will include standardised due diligence questionnaires, external audit capabilities and Significant Event Notification and Tracking (SENT), to enable members to react quickly to business continuity incidents or cyber security breaches without duplicative efforts. It also provides due diligence information such as financial details, stability ratings and audit reports, enabling institutions to perform their own risk assessments on third parties more effectively.
As the fintech ecosystem expands, a listing on the hub is expected to help raise the profile of fast-growing firms, helping them to increase speed to market and meet regulatory rules.
Mark Beeston, managing partner and founder of capital markets fintech venture fund Illuminate Financial Management, says: “Raising the profile of growing fintech firms, clarifying standards for customer onboarding and easing time to market are all critical factors for success, so this represents a real win-win for all participants.”