As financial technology (fintech) continues to evolve, third-party vendor risk management for financial institutions has become a mission-critical priority. In a sector where digital services, data-driven solutions, and external partnerships are the norm, overlooking third-party risk can lead to severe regulatory, operational, and reputational consequences.

This blog explores the unique challenges fintech companies face when managing third-party vendors and how adopting a structured, scalable assurance program like HITRUST can turn risk into a strategic advantage.

The importance of TPRM in fintech

The growing dependence on external vendors

Financial cybersecurity has always been a significant matter. Fintech thrives on agility and innovation — often achieved through partnerships with niche technology providers, cloud service vendors, and data analytics firms. This interconnected ecosystem accelerates time to market but also expands the attack surface. Each vendor relationship introduces potential vulnerabilities that can be exploited if not properly managed through a rigorous finance TPRM program.

What’s at stake: Data, compliance, and reputation

Financial institutions deal with sensitive customer data, proprietary algorithms, and regulatory scrutiny. A single third-party breach can expose this data, violate compliance requirements, and damage customer trust. The cost of a security failure is not limited to fines and downtime — it can derail investor confidence, trigger audits, and stunt growth. That’s why third-party risk management in the financial tech industry is essential.

Understanding third-party vendor risk

What qualifies as a third party?

In the financial technology sector, third parties are any external entities — vendors, partners, or service providers — that support critical business operations. This includes cloud infrastructure providers, payment processors, customer support outsourcers, KYC vendors, and even open-source software contributors. Each must be evaluated not only on performance but also on how they manage risk.

Common types of risk in financial technology

Operational risk

When a key vendor experiences downtime or fails to deliver as expected, it can halt operations, delay product releases, and frustrate customers. In a fast-paced industry like fintech, even brief disruptions can carry outsized consequences.

Security and privacy risk

Third parties often require access to sensitive systems or data. If their security posture is weak, it opens the door to breaches, insider threats, or data misuse. Fintechs must ensure vendors align with stringent security and privacy expectations.

Regulatory and compliance risk

Fintechs operate under a complex web of regulations such as GLBA, SOX, and PCI-DSS. Non-compliance by a vendor can trigger violations and fines for the financial institution itself, even if the organization has otherwise maintained compliance.

Fintech-specific TPRM challenges

Fast growth and loose controls

Third-party vendor risk management for financial institutions is critical. Startups and scaling fintechs are often laser-focused on innovation and growth. Risk management may be deprioritized, leading to ad hoc vendor evaluations and inconsistent controls. This reactive approach makes TPRM fragile and unsustainable.

Compliance complexity across jurisdictions

Many fintech companies operate across states and countries, each with distinct regulatory frameworks. Third-party risk management for fintech across these diverse jurisdictions requires a harmonized, auditable approach to compliance.

Cloud-native tech stacks and data sprawl

Fintechs are heavily cloud-based, often relying on multi-cloud or hybrid environments. This increases the complexity of securing data, enforcing consistent controls, and tracking how and where sensitive information is stored, accessed, and shared.

Best practices for managing vendor risk in fintech

Clear vendor classification and risk tiers

Not all vendors carry the same level of risk. Fintechs should categorize vendors based on access levels, data sensitivity, and operational impact. This finance TPRM approach allows for right-sized due diligence and resource allocation.

Build a scalable onboarding and review process

Vendor onboarding should include standardized risk assessments, contract clauses for compliance and security, and clear documentation. Regular reviews must be scheduled based on the vendor’s risk tier — higher-risk vendors require more frequent assessments. Explore our quick guide to TPRM best practices for establishing a scalable process for third-party vendor risk management for financial institutions.

Continuous monitoring of TPRM

Point-in-time assessments are no longer sufficient. Continuous monitoring — enabled through automation and threat intelligence — helps identify changes in vendor risk posture. This proactive stance helps prevent small issues from escalating into crises.

How an assurance program like HITRUST can help

Bringing structure to risk assessment and monitoring

The HITRUST third-party risk management solution offers a comprehensive assurance program that enables tailored risk management based on business needs. It streamlines vendor management and allows organizations to monitor vendor security gaps and remediations. It makes third-party vendor risk management for financial institutions effective and efficient and ensures vendors meet rigorous security and compliance expectations.

Making audits easier with pre-mapped controls

HITRUST's pre-mapped controls to frameworks like ISO, NIST, and PCI-DSS mean fewer gaps and faster audit preparation. Vendors can demonstrate compliance with multiple standards using a single assessment, reducing audit fatigue and increasing credibility with stakeholders. For a deeper dive into optimizing your TPRM strategy, read our blog.

Turning vendor risk into a strategic advantage

Rather than being a burden, effective third-party risk management in financial tech companies can become a differentiator. Demonstrating robust, scalable TPRM builds trust with customers, investors, and regulators. It signals maturity, readiness for growth, and a commitment to responsible innovation.

By adopting the HITRUST TPRM approach, fintech companies gain the structure and confidence to scale securely — protecting data, preserving trust, and accelerating market access.

Learn how HITRUST can help simplify third-party risk management for fintech companies.

If you’re still accepting SOC 2 reports from your vendors as your primary assurance mechanism, it’s time to take another look. SOC 2 was once considered a strong security indicator for many organizations. However, it has now become little more than a check-the-box exercise. 

Why SOC 2 isn’t enough 

The threat landscape has evolved. Data breaches have become harder to detect. Cyberattacks have become more sophisticated. Bad actors are finding new ways to target weak vendors and gain access to sensitive data from multiple organizations. Not just that, ransomware attacks have also increased, disrupting business continuity and causing major reputational and financial damages.     

The problem? SOC 2 has not evolved to tackle these new-age challenges. Instead, it has been trivialized to the point where it no longer signifies robust assurance. 

Automation, inconsistency in auditing practices, and vendor-scoped control selection result in many SOC 2 reports providing limited insight into a vendor’s actual security posture. Often, they also miss critical control areas, like third-party risk management (TPRM) and email security, putting your organization at risk of inherited vulnerabilities. 

In a time of escalating ransomware attacks and increased regulatory scrutiny, the assurance mechanisms you rely on need to do more than just say that your vendor is secure. They need to prove it. 

That’s where HITRUST certification comes in. 

Why HITRUST is a better alternative  

HITRUST offers an effective, standardized approach to vendor risk management.  

Unlike SOC 2, HITRUST  

• Stays ahead of emerging threats with threat intelligence data  

• Uses a comprehensive, prescriptive framework aligned with 60+ standards 

• Delivers proven results as 99.41% of HITRUST-certified environments remained breach-free in 2024 

• Offers scalable assessment options based on business needs and vendor’s risk profile 

• Streamlines managing large volumes of vendors and reduces manual effort 

• Encourages continued risk tracking and remediation  

But what does this mean for your vendor risk management strategy? And how can you adopt this effective TPRM approach? 

To explain this, we’ve created a concise eBook to help you evaluate SOC 2’s limitations and explore why modern organizations are replacing it with HITRUST certification as their new TPRM baseline. 

Read the eBook now to learn more: Why It’s Time to Rethink SOC 2 in Third-Party Risk Management

It’s time to move from traditional, checkbox compliance to proven cybersecurity assurance that can truly reduce risk and help protect your business. Choose HITRUST certification over SOC 2 reports to strengthen your TPRM program.  

Texas has passed a new law effective September 1, 2025, providing small and mid-sized businesses (SMBs) with fewer than 250 employees a safe harbor against exemplary (punitive) damages in the event of a data breach if they implement and maintain a recognized cybersecurity program, such as HITRUST certification. 

What This Means for Your Business 

If you have 100-249 employees and your business maintains a cybersecurity program that aligns with an industry-recognized framework, you can significantly reduce your legal risk if a breach occurs, even if sensitive data is compromised. The law encourages proactive investment in cybersecurity while providing legal protection and peace of mind. 

What Qualifies as a Recognized Framework 

The Texas safe harbor law recognizes frameworks such as the NIST Cybersecurity Framework and the HITRUST CSF. These frameworks help businesses implement administrative, technical, and physical safeguards to protect sensitive information. 

Why HITRUST Certification Makes Sense 

HITRUST certification aligns with the HITRUST CSF, a comprehensive framework that integrates and harmonizes standards such as NIST, HIPAA, and ISO into a single, prescriptive, and scalable approach to security and compliance.  

HITRUST certification 

• Demonstrates that your organization aligns with a recognized cybersecurity framework 

• Can qualify your business for Texas safe harbor protection under the new law 

• Provides evidence of reasonable security practices to customers, insurers, and regulators 

• Offers the only assurance proven to reduce risk, as 99.41% certified environments remained breach-free in 2024  

• Allows you to choose from different types based on your organization size, risk maturity, and business needs  

Is HITRUST Certification Right for Your Business? 

Regardless of your industry, adopting HITRUST helps you reduce legal risk, improve your cybersecurity, maintain compliance, and demonstrate your commitment to protecting your data and your business. HITRUST offers multiple certification types (e1, i1, r2), allowing you to start with foundational, validated security practices and scale your assurance program as your business grows. 

Next Steps

If you would like to learn how HITRUST can help your organization align with the Texas safe harbor law and strengthen your cybersecurity program, please contact us. We can help you understand which certification type fits your current security posture and business needs.