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.
