A consortium of financial institutions, including Bank of America, JPMorgan Chase, Wells Fargo and American Express, said Tuesday it is launching a vendor management company called TruSight.
TruSight is expected to open in the first quarter; other banks have said they would like to join when it is up and running.
“We’re trying to harness the collective industry expertise, so it’s about sharing and improving best practices and raising the bar for the industry as a whole,” said Abel Clark, TruSight's CEO. Clark was global managing director of the financial division at Thomson Reuters.
Assessing suppliers and monitoring their performance has become a tougher challenge ever since bank regulators began issuing stricter guidelines in 2012. For any vendor of a critical service or product, banks have to be very careful about whom they choose, score them using risk-based criteria, conduct on-site visits, monitor their financial performance and security practices and draft thorough contracts and related agreements. The work tends to be laborious and costly.
The four founders of TruSight have been working together for the past two years to craft a standardized vendor questionnaire for risk assessment.
“There are lots of financial institutions, lots of third parties, and they spend a lot of valuable resources requesting, providing and validating information that’s kind of similar but not the same in a very inefficient, duplicative manner,” Clark said. “Each financial institution has a thorough but unique approach to the way they do assessments, which suppliers then have to complete. The benefit of an industry utility comes in where there is consistency.”
This isn't the first bank consortium for vendor management.
In June, HSBC, Goldman Sachs, Morgan Stanley and Barclays invested in a platform called KY3P run by IHS Markit. KY3P has been operating for two years and has nearly 100 end users and more than 1,200 vendors on the platform.
Clark said TruSight will go a step beyond. It will also gather, store and share data from vendors. In addition, it will validate the vendors’ responses and conduct remote and on-site vendor assessments on the banks’ behalf. It will also help identify and promote best practices. The consortium model means these services can be done more consistently and at a fraction of the cost of each bank acting on its own, he said.