Benefits of using an MSP
Managed service providers (MSP’s) have been around for years in most industries. During the pandemic, we saw the reliance on managed service providers really get put to the test. Let’s face it – we were all put to the test of how best to maintain operational reliability and thus ensure customer confidence, while also keeping a close eye on any potential for loss of data.
How did we get here? Over the years, as companies struggled with how best to scale operations in a cost-effective and efficient manner, many turned to outsource key activities, finding it most less expensive to manage using external resources than hiring to do it in-house. In addition, particularly for smaller institutions, finding a reliable MSP to support a key business function may be the most practical solution, particularly if the institution lacks experienced credential personnel to handle a complex highly regulated function.
In selecting an MSP, particular care must be given to doing appropriate due diligence to ensure the reliability and proper organization of the MSP, assessing the risks associated with outsourcing a particular product or function, monitoring their activities to ensure they are meeting their contractual obligations, and testing their business continuity plans on a regular basis. By selecting the correct firm, an institution can gain a lot from the MSP’s particular area of expertise, as the larger ones have a huge advantage in leveraging both economies of scale and always staying abreast of best-in-class business practices.
Using a managed service provider for TPRM has its unique set of challenges but brings very tangible benefits. Here are some of the benefits you are likely to realize in this engagement:
1) Scale your TPRM Program.
- Increase the scope of vendors being assessed.
- Increase the frequency of vendors being assessed.
2) Reduce costs by.
- Leveraging automation.
- Labor cost arbitrage.
3) Faster Delivery due to.
- Specialized skillsets of the analysts.
- Familiarity with the vendors.
- Optimized Process and workflow.
- Audit Trails
The financial services industry is certainly one of the business verticals that has done the most outsourcing of core processing functions and customer support. In doing so, they have also become one of the most highly regulated as well, thus the regulatory guidance available to govern these activities is pretty well documented and can serve as a great resource for other industries. The Federal Financial Institution Examination Council (FFIEC) has very prescriptive guidance on their website, including an entire guidance to outsourcing technology and IT examination principles. Similarly, the Office of the Comptroller of the Currency (OCC) has what is considered to still be the gold standard for managing third parties, in the form of bulletin 2013-29 – although it has been updated through bulletins 2017-7 and 2017-21, the earlier one is still the most prescriptive. Finally, the Federal Deposit Insurance Corporation (FDIC) has issued financial institution letters 44-2008 and 3-2012 as their most relevant and prescriptive information.
Using MSPs is not new, but the rigor around selecting, monitoring, and managing their activities continues to evolve and improve, particularly given the lessons learned in some of the major data breaches of recent years. Continuing to focus on MSP’s yields cost savings, reaps benefits in economies of scale, and ensures growth is not inhibited by lack of internal resources.
Read some of our success stories to learn how ComplyScore has helped companies scale their TPRM Program, become more secure while keeping their costs low. Schedule an expert consultation to learn more.