"It's not that you can't use a startup, but the management of the bank will have to justify it to the board, which will have to justify to the regulators why they're using Larry's ATM Machines rather than Diebold," says attorney Lawrence Kaplan.

Risk-Scoring Mandate Pushes Banks to Rethink Vendor Choices

It's no longer enough to choose a vendor because it's a market leader. Regulators are now requiring banks to grade vendors based on the perceived risk to the bank if a vendor goes bust or can't do the job.

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