Implementation of systematic software vendor management processes in banking IT procurement

Posted: Jan 17, 2022

• Matthew Smith
• Mia Allen
• Mia Hernandez

Abstract

The banking sector's increasing reliance on third-party software vendors has created unprecedented challenges in procurement management, with traditional approaches proving inadequate for modern technological complexities. Current vendor management practices in banking institutions often suffer from fragmented evaluation criteria, reactive risk assessment, and insufficient integration between procurement decisions and long-term strategic objectives. This research addresses these limitations by developing and implementing a systematic framework that transforms vendor management from a transactional function to a strategic capability. Traditional banking procurement models typically emphasize cost optimization and basic compliance checks, overlooking the critical interdependencies between vendor performance, cybersecurity resilience, and business continuity. The financial services industry faces unique challenges in vendor management due to stringent regulatory requirements, the sensitive nature of financial data, and the critical importance of system availability. This paper introduces a novel approach that integrates principles from supply chain management, cybersecurity, and strategic partnership development. Our framework represents a paradigm shift from viewing vendors as mere service providers to considering them as integral components of the banking institution's technological ecosystem.