Financial firms are trying to cut costs and staff and focus their resources on the areas where they have a competitive advantage.
Markit, a UK financial-information company, which was launched in a converted barn in 2003 and is listed in the US, is making a business out of taking on some of the tasks they no longer want to perform.
The company’s staff dub themselves as being “plumbers in suits,” according to a 2013 Economist article, and the company has carved out a critical role in fulfilling back-office tasks for financial firms.
The company’s latest move in this space involves partnering with technology company Dell and banks Barclays, HSBC, and Morgan Stanley to launch a new service called Know Your Third Party, or KY3P. It follows an earlier launch of a Know Your Customer service with Genpact, which now has a whole host of banks signed up.
Michele Trogni, managing director and cohead of solutions at Markit, told Business Insider: “
We think our strength comes in bringing a number of banks or asset managers or hedge funds together and creating a standard that everyone can agree on.”
The aim is to create a central repository for information required for client or vendor due diligence, cut down on the amount of time it takes to cement a new commercial relationship, and reduce unnecessary, replicative requests for information.
“We call it smartsourcing,” Trogni said.
The new service will become a central hub for any company that needs to perform third-party due diligence. The hub will include standardised due-diligence questionnaires, financial details, and audit reports, with a view to helping institutions perform their own risk assessments on third parties.
Trogni said: “We started with KYC, and we started to talk to banks, to asset managers, and it became increasingly obvious that there was a growing need for somebody to look at the whole process of knowing your third party and managing the risk of the third parties you are relying on.”
The service will be aimed at financial companies initially, and Barclays, HSBC, and Morgan Stanley will be onboarding their third parties onto the data hub. Markit plans to roll the service out to other industries in time. Dell, for example, is onboarding its own third parties onto the service.
Sameer Kishore, vice president and global general manager of banking, financial services, and insurance at Dell Services, said: “As an organisation we see tremendous benefits in this platform both as a consumer and a supplier of third-party risk data. We are actively encouraging our vendors to become part of the network platform as well.”
Trogni said: “If you could create one standardised platform that can measure 80% of the risk features around a product you are selling or a service you are delivering that could satisfy all industries, you would reduce the number of people required to send spreadsheets back and forth, and you can focus on the risk.”
The service has the potential, in time, to become a Yellow Pages for third-party vendors, according to Trogni. Users of third parties will be able to access all the information they need about potential vendors through the data hub.