POST Online Media Lite Edition



 

Banks don't pay attention to third-party partners' security

Staff writer |
Benjamin M. Lawsky, Superintendent of Financial Services, announced that the New York State Department of Financial Services (NYDFS) found potential cyber security vulnerabilities with banks' third-party vendors.

Article continues below






Fewer than half of the banks surveyed conduct any on-site assessments of their third-party vendors.
Banks rely on third-party vendors for a broad-range of services – such as law firms that provide them with legal advice or even companies contracted to run their HVAC systems. Those third-party firms often have access to a financial institution’s information technology systems, providing a potential point of entry for hackers.

Among other findings, the NYDFS report uncovered that nearly 1 in 3 banks surveyed do not require their third-party vendors to notify them of cyber security breaches.

In the coming weeks, NYDFS expects to move forward on regulations strengthening cyber security standards for banks' third-party vendors, including potential measures related to the representations and warranties banks receive about the cyber security protections in place at those firms.

NYDFS conducted a survey of 40 banking organizations – including many of the largest institutions it regulates – about the cyber security standards those firms have in place for their third-party vendors. Key findings outlined in the report NYDFS issued today include:

Nearly 1 in 3 (approximately 30 percent) of the banks surveyed do not require their third-party vendors to notify them in the event of an information security breach or other cyber security breach.

Fewer than half of the banks surveyed conduct any on-site assessments of their third-party vendors.

Approximately 1 in 5 banks surveyed do not require third-party vendors to represent that they have established minimum information security requirements. Additionally, only one-third of the banks require those information security requirements to be extended to subcontractors of the third-party vendors.

Nearly half of the banks do not require a warranty of the integrity of the third-party vendor’s data or products (e.g., that the data and products are free of viruses).

NYDFS is in the process of conducting a similar survey regarding the cyber security of third-party vendors at the insurers it regulates. The Department also expects to put in place higher cyber security standards for vendors providing services to insurance companies.


What to read next

Some of biggest European banks performed poorly on stress test
Profits of China's banks expected to grow by 10%
Germany: All banks are welcome to come after Brexit