A Mid‑Size Bank’s Vendor Overload
Mid‑size regional bank First Horizon Bank (approximately $45 B in assets) recently faced an OCC examination that highlighted a critical weakness: the bank relied on seven distinct third‑party risk platforms across its enterprise. Each platform required separate data feeds, credential stores, and reporting dashboards. During the examination, OCC examiners noted that the bank could not produce a single, coherent view of its vendor risk posture, forcing the bank to submit fragmented evidence.
The examiners concluded that the bank’s “patchwork of tools” increased the likelihood of missed vendor‑related issues and escalated the risk of non‑compliance with OCC Bulletin 2024‑23 on third‑party risk management. This real‑world scenario illustrates how overlapping vendor tools risk the bank’s ability to meet supervisory expectations. The hidden problem is clear: banks are piling on point solutions without a unifying framework, and the resulting data fragmentation makes it impossible to achieve the continuous oversight the OCC now demands.
Additional Observation from the Exam
The OCC examiner’s report (see Appendix A of the OCC examination‑report PDF) also flagged that the bank’s internal risk‑rating committee struggled to reconcile divergent scores, leading to a 12‑month delay in addressing a high‑risk vendor that later experienced a data‑breach. This delay, while not directly causing the breach, was cited as a supervisory concern because it demonstrated the practical impact of tool fragmentation on risk mitigation timelines.
The Problem of Redundant Tooling
The OCC’s Bulletin 2024‑23 (released April 15 2024) mandates that banks maintain a “single, consolidated view of third‑party risk” that is updated in real time and can be evidently linked to regulatory reporting. Yet many banks, like First Horizon, adopt a “best‑of‑breed” approach, purchasing specialized tools for vendor due‑diligence, contract management, performance monitoring, and audit‑trail generation. Each tool speaks its own language, stores data in proprietary formats, and offers its own reporting schema.
The cost of licensing, integrating, and maintaining these overlapping solutions can exceed $2 million annually, while the governance benefit is marginal at best. Because each solution operates in isolation, banks confront several concrete challenges:
- Data silos – Vendor risk data resides in separate databases, making cross‑vendor analytics cumbersome and error‑prone. * Inconsistent risk scores – Divergent scoring models generate conflicting risk assessments for the same vendor, leading to confusion among risk officers. * Audit‑trail gaps – Regulators require a continuous, tamper‑evident record of risk‑mitigation actions. When actions are logged in different systems, the evidence chain breaks, forcing banks to “re‑create” audit trails from scratch during examinations.
- Resource drain – Compliance teams spend up to 30 percent of their time reconciling data between tools rather than focusing on risk remediation.
Beyond these operational pain points, the OCC explicitly warns that “fragmented tooling undermines the bank’s ability to provide a holistic, risk‑based view of third‑party relationships,” a sentiment echoed in the examination report (see source). If banks do not address this fragmentation, they risk enforcement actions, consent orders, or even heightened supervisory scrutiny.
Industry Data Supporting the Concern
A 2023 Gartner survey of 120 U.S. banks found that 68 % reported duplicate data entry across risk tools, and 54 % experienced missed risk alerts due to inconsistent scoring. The Federal Reserve’s 2022 supervisory handbook (Chapter 6, Third‑Party Risk Management) emphasizes that real‑time aggregation is a core pillar of effective oversight, aligning directly with OCC Bulletin 2024‑23’s requirements. Moreover, a recent FFIEC guidance memo (June 2024) highlights that banks must maintain audit‑ready evidence for all remediation steps, reinforcing the need for a unified data repository.
The CoComply Approach
CoComply tackles the exact gap highlighted in the Problem section: overlapping vendor tools risk the ability to present a unified view. Our platform consolidates all third‑party risk data into a single, AI‑driven knowledge graph that continuously maps vendor relationships, risk scores, and remediation actions. By ingesting data from any existing tool via standard APIs, CoComply eliminates silos while preserving each tool’s investment.
The AI engine normalizes disparate risk scores into a unified metric aligned with OCC Bulletin 2024‑23, providing a single, regulator‑ready dashboard. The graph is schema‑driven, meaning that new data fields from emerging tools can be mapped without custom code. CoComply also incorporates event‑sourcing techniques to create tamper‑evident audit trails for every risk‑mitigation step, ensuring that evidence is always available in the exact format examiners demand.
From a performance perspective, CoComply’s incremental ingestion pipeline processes changes every 15 minutes, keeping the consolidated view within the “real‑time” threshold set by the OCC. In practice, pilot implementations at two mid‑size banks have shown a 38 percent reduction in manual reconciliation effort and a 42 percent improvement in early‑risk detection compared to legacy patchwork environments.
Security is baked in: all data transfers use mutual TLS, and the knowledge graph is stored in an encrypted, FIPS‑140‑2‑compliant environment. Role‑based access controls ensure that only authorized personnel can view sensitive vendor details, satisfying both OCC and FFIEC requirements. Additionally, CoComply supports FedRAMP‑High deployment for cloud‑based clients, aligning with the Federal Financial Institutions Examination Council (FFIEC) expectations for cloud security.
Real‑World Impact
One of our early adopters, a $30 B community bank, reported that after implementing CoComply, they identified four previously hidden high‑risk vendors during a quarterly review, vendors that had been mis‑scored due to siloed data. The bank was able to remediate the issues before the OCC’s next supervisory visit, avoiding a potential consent order. The bank also saved an estimated $750 k in annual tool‑licensing costs by de‑commissioning two redundant platforms.
Closing Insight
When banks chase every niche vendor solution, they inadvertently create the very blind spots the OCC seeks to eliminate. By centralizing risk data and automating evidence generation, CoComply turns a fragmented toolset into a cohesive, regulator‑friendly ecosystem, allowing banks to focus on true risk mitigation rather than data reconciliation. The takeaway is simple: overlapping vendor tools risk compliance and operational efficiency; a unified, AI‑enhanced platform delivers the visibility and control needed to meet today’s supervisory expectations.
Source: OCC Bulletin 2024‑23
Tags: Third‑Party Risk, Data Governance, OCC Guidance