New York puts bank boards on the hook for vendor tech

New York regulators are increasing pressure on banks to take direct responsibility for their technology partners. This shift moves tech oversight from IT departments straight to the boardroom. A recent survey highlighted a major vulnerability: nearly half of midsize and community banks do not have the legal right to audit their software vendors. This means many lenders are operating on systems they cannot fully verify or control. For retailers and operators, this creates a ripple effect. If you partner with a bank to provide customer financing, that bank is now under a microscope regarding its third-party software. Regulators are worried about 'concentration risk'—where many different lenders rely on the same few tech providers. If one provider fails or gets hacked, the entire financing ecosystem could freeze. Expect your lending partners to become more selective and demanding. They will likely pass these requirements down to you. You may see more rigorous security audits, longer onboarding times for new financing programs, and stricter data-sharing rules. Banks are no longer allowed to simply trust their tech vendors; they must now prove those vendors are secure. If a financing platform can't meet these new New York standards, your lender may be forced to drop them, potentially disrupting your point-of-sale options.

Source: American Banker — Top News

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