Digital Procurement Transformation in Financial Institutions: Optimizing Third-Party Risk Management with a Unified Procurement Platform

THIRD-PARTYRISK MANAGEMENTWITH A UNIFIED PROCUREMENT PLATFORMBFSI SECTOR This is a way of doing business that no longer meets the needs of customers and partners in the digital era. In fact, a lack of unification between third-party risk management and procurement creates major challenges. It delays onboarding new vendors, causing a negative impact on the customer experience, and it also creates potential cybersecurity gaps that increase risk of breaches and downtime.Perhaps most importantly, siloed and unaligned risk management and procurement systems can be an insurmountable roadblock to digital transformation initiatives—stifling innovation and causing firms to lose competitive ground by failing to fully leverage big data analytics and other modern technology advances.There has to be a better way, and there is. By transitioning to a single, comprehensive, digital source-to-pay platform, financial institutions can unify third-party risk management and procurement activities to achieve seamless supplier onboarding, interaction, monitoring and compliance. With the right platform, financial firms will not only reduce risk and accelerate onboarding of third-party partners, they will also achieve a single version of the truth to ensure their organizations can take advantage of data-driven innovations such as big data analytics, machine learning, artificial intelligence (AI), the internet of things (IoT) and blockchain.As financial institutions embrace a digital-first strategy, one of their top challenges is mitigating the time and risk involved in onboarding new vendors. In many financial firms—whether financial services, banking or insurance—the systems and processes for procurement and third-party risk management are not synchronized and, worse, are typically siloed from one another. WHITE PAPERDigital Procurement Transformation in Financial Institutions: Optimizing Third-Party Risk Management with a Unified Procurement Platform 2EMBRACING A DIGITAL-FIRST STRATEGYFinancial institutions are quickly recognizing the need to move to digital-first strategies. Among all industries, the financial sector is projected to have the fastest annual increase in digital transformation investments through 2022, averaging about 20.4% growth per year, according to IDC.1Older, siloed, manual processes for third-party procurement and risk management simply have no place in any financial services, banking or insurance firm that is looking at a digital-first present or future.With separate systems, you may be unaware that a third-party supplier is not up to code when it comes to security. You may be awarding business to vendors that have not been fully vetted. You may not be able to achieve ongoing monitoring to assure compliance, security and governance. You may be using manual processes in places where automation can increase speed and reduce risk in onboarding and managing partners. Therefore, a key goal of any digital transformation initiative is to modernize third-party onboarding and management. This involves transitioning to a single source-to-pay solution with fully embedded third-party risk management. It should be one of the very first areas that needs to be addressed in any digital-first strategy, for these key reasons: •A diverse ecosystem: Financial institutions areextremely reliant on their third-party partners tosatisfy the needs of customers and employees. Theecosystem is typically broad and diverse, includingIT outsourcing firms, risk management, consultingservices and a growing array of cloud-based ITservices and software. For example, insurancecompanies are now working with new insurtechsuppliers to help drive digital transformation.1 “Businesses Will Spend Nearly $1.2 Trillion On Digital Transformation This Year as They Seek an Edge in the Digital Economy, According to a New IDC Spending Guide,” IDC, April 2019.•Slow and Risky Processes: When third-partyprocurement and risk management are notsynchronized, the processes involved in onboardingnew vendors and managing existing vendors can bemanual and slow. What’s more, siloed systems andprocesses bring additional, unnecessary risk in termsof cybersecurity, compliance and governance.•Maximizing the Value of Data: Data is fast becomingthe defining differentiator and disruptor in financialservices. Organizations that are able to fully leveragetheir data are able to achieve competitive advantagethrough automation and accelerated developmentcycles. A single version of the truth is necessary tomaximize the value of big data analytics, IoT, AI,blockchain and other innovations.BUSINESS BENEFITS OF A SINGLE-SOURCE PLATFORMTransitioning to a unified source-to-pay system with embedded third-party risk management delivers a wide range of benefits to your organization, including:•Improved customer experience through faster andsafer onboarding and ongoing management of third-party partners.•Reduced risk of cybersecurity breachesand downtime.•Reduced risk of gaps in reg