FIL-19-2016
March 14, 2016
Technical Assistance Video on Outsourcing Technology Services
Summary:
As part of the FDIC’s Community Banking Initiative and Technical Assistance Video Program, the FDIC is announcing the release of a new video on outsourcing technology services. The video is designed to assist community bank directors and senior management in developing a comprehensive risk-assessment program for vendor management.
Statement of Applicability to Institutions with Total Assets under $1 billion: This Financial Institution Letter applies to all FDIC-supervised financial institutions.
Highlights:
- As financial institutions become more involved in technology outsourcing, they must manage the risks associated with reliance on third-party service providers. Outsourcing has become more complex, with many banks using vendors for key business functions and relying on multiple providers.
- The video on outsourcing technology services discusses the responsibilities of financial institutions’ boards of directors and senior management in governing their institutions’ vendor-management program.
- A vendor-management program represents the policies and procedures established to select and monitor third-party relationships.
- The video covers the main components of a vendor-management program, including the risk-assessment process, the service-provider selection program, contract negotiation and evaluation, and ongoing monitoring.
- The video also discusses business continuity planning and testing, and resources available to assist institutions in establishing and maintaining a sound vendor-management program.
- The video is available for viewing on the FDIC’s website at https://www.fdic.gov/regulations/resources/director/virtual/vendor.html.
- Alternatively, FDIC-insured institutions may download the video through FDICconnect by contacting their FDICconnect coordinator.