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The 2014 FinTech Rankings: A Sneak Preview
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Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
9/24/2014 | 4:26:46 PM
Re: Balancing Act
While working with larger vendors may minimize risk, there is also risk with overlooking smaller vendors just because of their size. Larger vendors have more established products and better security, but they often are slow to move on newer technologies. Smaller vendors are better able to jump on new technology trends and quickly adapt. So, working with larger vendors may satisfy the risk and compliance folks. But, competitors may be jumping on newer technology (much faster) by utilizing smaller vendors...leaving the firms that only stick with larger vendors at a competitive disadvantage.
pgsilva
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pgsilva,
User Rank: Apprentice
9/24/2014 | 1:52:41 PM
Balancing Act
It will always be a balancing act between demanding a shift of liability to 3rd party providers and needing to maintain relevancy in adopting new technology.  Bryan, we're already seeing that kind of consolidation at the high end of technology providers.  In my mind it absolutely minimizes risk by partnering with large vendors, although to Jonathan's point, nothing is guaranteed, even with the largest vendors.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
9/23/2014 | 11:00:45 AM
Re: Want it both ways?
I don't know that anyone is that secure any more in today's environement. Even the security companies like RSA have been hacked. If they can be hacked, I'd think anyone can. The only way to deal with it is to constantly monitor companies you're working with and make sure they're constantly moniroting for any suspicious activity in their networks. The Target hackers were in Target's network for months creating new user accounts and "hiding in plain sight." Banks can't allow that to happen in their own networks, or those of their vendors. The Target hackers got into Target's network througha  vendor portal to begin with.
Byurcan
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Byurcan,
User Rank: Author
9/23/2014 | 10:56:52 AM
Re: Want it both ways?
Yes, I wonder if this will enable the bigger/better known vendors to gain even more market share, since banks know they are (for the most part) trustworthy and secure.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
9/23/2014 | 10:53:54 AM
Re: Want it both ways?
As it should. Banks are charged with keeping their customers money and data safe. And doing the proper due diligence on vendors and partners is an essential part of that now.
Byurcan
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Byurcan,
User Rank: Author
9/23/2014 | 10:17:25 AM
Re: Want it both ways?
Yes, it's obvioualy extremely important for banks to do the proper due dilligence with any third-party they work with. Because if there is a breach and a third-party is to blame, the bank will also recieve a share of the blame as well.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
9/22/2014 | 4:41:37 PM
Re: Want it both ways?
There seems to be a bigger focus among regulators on banks' vendor relationships and the risks there. So simplifying the vendor ecosystem is likely being driven by that as well. The more vendors you have, I'd imagine the more difficult it is to meet regulatory demands in terms of managing them.
KBurger
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KBurger,
User Rank: Author
9/22/2014 | 1:02:04 PM
Re: Want it both ways?
Good point. And the overall emphasis on transparency, metrics, deliverables, etc. is likely to result in more scrutiny overall (internal and external) of these relationships.
pgsilva
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pgsilva,
User Rank: Apprentice
9/22/2014 | 12:07:02 PM
Re: Want it both ways?
They're certainly buying simplicity at the cost of more complex vendor management environment.  I think the increase in spending among fewer vendors has to continue, both as M&A activity at technology providers continues and as banks consolidate 3rd party relationships.  But the effort needed to manage those relationships will increase as banks tighten their risk management practices and as regulatory changes demand better operation risk control as well.
KBurger
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KBurger,
User Rank: Author
9/22/2014 | 11:18:34 AM
Want it both ways?
Very interesting to see the evidence of growth in IT spending, Jerry. I certainly understand banks' drive to consolidate systems investments with fewer tech companies; however, I wonder if the growth in spending for consultants and integrators means that this is easier said than done. On the one hand, banks appear to be striving to streamline and simplify; on the other hand, it looks like they need to increase their spending with consultants to get that done. Are they trading off one form of complexity for another?


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