JPMorgan, Wells Fargo Form Company to Handle Partnership Vetting
(Bloomberg) -- Wall Street firms including JPMorgan Chase & Co. and Bank of America Corp. formed a group to help manage risks from partnerships as banks increasingly agree to tie-ups with fintech companies.
American Express Co. and Wells Fargo & Co. also helped establish the company called TruSight, which will help banks streamline risk assessments of suppliers and partners, according to a statement issued Tuesday. The company expects to begin working with its four founders in the first quarter of 2018 before offering services to other banks later in the year, said Abel Clark, chief executive officer of the new venture.
“The cost of third party risk management has risen sharply,’’ Clark said in a telephone interview. “There really is a critical need to transform the risk and effectiveness of third party risk management.”
U.S. banks have turned to fintech firms as they seek to become more digitally savvy in areas including consumer payments and fraud prevention. To vet third parties, banks often start by giving them a 300-question survey and follow up with phone calls, emails and on-site visits. The process can take weeks or months, Clark said, adding that the founders of TruSight began quietly working together over two years ago to create a standardized approach.
And hacks like the one Equifax Inc. suffered earlier this year add to the urgency. The Atlanta-based credit bureau said hackers accessed personally identifiable information -- including Social Security numbers and driver’s license data -- for 145 million U.S. consumers.
“Risk events are becoming more common and more sophisticated so it’s clear institutions need to make sure that they and their partners are managing this risk,’’ Clark said.
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