Three US banking regulators, the Federal Deposit Insurance Corporation (FDIC), the US Federal Reserve Board and the Office of the Comptroller of the Currency, have released interagency guidance on third-party relationships.
The new guidance is universal and can be applied to banking entities of any size, but takes into account the degree of risk posed by partnership arrangements with third parties. In recent years the variety of such arrangements has increased. Regulators understand that there are many reasons for this trend, such as faster access to new technologies and human capital, and new supply chains, and opportunities for new products and services in new markets.
Partnerships with third parties provide banks with competitive advantages that would otherwise be difficult to achieve. Banks involve partners in key business processes, which helps to save resources and use them to bring maximum profit.
However, this does not eliminate the obligation to conduct sound risk management. While outsourcing certain functions may indeed reduce risks, such as information security, this does not mean that the same partnership cannot increase risks in other areas for both banks and their clients. The new guidance, which examines in detail all stages of the development of business relations with third parties, is designed to prevent this.