Studies across major global markets show a consistent pattern: most data breaches in financial services stem from third-party weaknesses. Attackers bypass strong internal controls by targeting smaller partners with lighter defences. One compromised vendor becomes the open door.
It doesn’t matter how sophisticated a bank’s SOC is. If a vendor handling payroll, video conferencing, or file transfers gets breached, your systems become collateral damage. Vendor ecosystems create interconnected risk, and attackers exploit that link as their first choice.
Regulators have grown tired of “we didn’t know our vendor was compromised.” New frameworks in 2026 now demand active oversight, proof of continuous monitoring, and demonstrable controls across the supply chain. Vendor risk is no longer optional governance—it’s a regulated obligation.
The Vendor Blind Spot
Most organisations believe they have vendor risk under control. But their confidence often comes from paperwork, not evidence. Threats move faster than traditional oversight. Blind spots grow where assumptions replace verification.
• Banks spend millions securing their perimeter while vendors hold the keys
Banks deploy advanced firewalls, hardened endpoints, encryption layers, and 24/7 SOC teams. Yet many vendors that process or store sensitive data operate with outdated servers, limited monitoring, and minimal cyber maturity. The mismatch creates an open invitation for attackers.
• Real examples
The MOVEit breach exposed hundreds of financial institutions—yet none of them were compromised directly. Instead, attackers infiltrated a file-transfer product used by trusted vendors.
SolarWinds created a similar domino effect. One compromised supplier allowed access to government agencies, financial firms, and global enterprises in one sweeping event.
• The supply chain is now the attack chain
Attackers no longer batter down the front door. They walk through the vendor pathway because it’s easier, quieter, and often unnoticed for months. This shift has changed the entire nature of financial cyber defence.
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Why Traditional Due Diligence Fails
Vendor risk processes haven’t kept pace with attacker behaviour. Most organisations rely on outdated methods that create a false sense of safety. They assess vendors once a year while threats evolve every hour.
• Annual questionnaires are theater, not security
Tick-box questionnaires look good in audits, but they rarely reflect real-world security posture. Vendors answer aspirationally. Some copy policies from templates. Others simply say “yes” because saying “no” risks losing the contract.
• Point-in-time assessments miss continuous threats
Threat landscapes shift daily. A vendor can pass a cyber security audit in March and be breached in June. Point-in-time results cannot capture insider threats, shadow IT usage, unpatched systems, or new vulnerabilities.
• Vendors lie, get compromised, or simply don’t know their own risk
Most vendors lack mature security teams. Some don’t understand the risk they carry. Others rely on unmanaged subcontractors. Even honest vendors cannot guarantee their status stays clean for long.
What’s Changing in 2026
The regulatory landscape emerging in 2026 is reshaping vendor management. Global frameworks are converging on one common expectation: continuous, evidence-based oversight. Financial institutions must prove they can govern their own supply chain.
• DORA enforcement in EU creating global ripple effects
The Digital Operational Resilience Act (DORA) requires banks to track, monitor, and report vendor cyber risk. While it’s an EU regulation, its requirements extend to any institution doing business with EU entities. The result is global alignment—every vendor relationship must meet new minimum standards.
• SEC cyber rules demanding vendor transparency
In the US, the SEC now expects public companies to report material cyber risks, including weak vendor security. This forces boards to pay attention. Vendor oversight is no longer buried in IT reports; it’s a board-level concern with legal accountability.
• Insurance underwriters denying claims for inadequate vendor oversight
Cyber insurers have updated claim conditions. If your vendor caused the breach and you cannot show ongoing oversight, insurers may decline payouts. This shift places the burden directly on the financial institution.
• The cost: Regulatory fines now exceed breach costs
In 2026, fines for weak vendor management often surpass the cost of the breach itself. Regulators see vendor negligence as systemic failure, not a one-off incident. Compliance failures carry steep penalties.
The Real Due Diligence Framework
Vendor due diligence is no longer a paperwork exercise. It requires measurable controls, continuous verification, and the involvement of independent assessors. The goal is resilience, not compliance theatre.
• Continuous monitoring, not annual check-ins
Banks must observe vendor behaviour throughout the year. Tools that track vulnerabilities, patch status, leaked credentials, and shadow infrastructure give a real-time view of risk.
• Automated vendor risk scoring
Manual scoring cannot handle hundreds of vendors. Automated tools analyse threat intelligence, traffic trends, configuration baselines, and external exposures. They assign dynamic scores that shift with the vendor’s posture.
• Contractual requirements that actually matter
Effective contracts should include:
- Breach notification obligations within strict timeframes
- Minimum insurance requirements aligned with risk surface
- Audit rights enabling a true cyber security audit
- Evidence of independent assessments by NIST cybersecurity auditors or ISO 27001 information security auditors
These terms create accountability rather than promises.
• Tiered approach based on data access level
Not all vendors need the same oversight. High-risk vendors—such as those with system credentials or access to financial data—require frequent assessments and ongoing monitoring. Low-risk vendors need lighter controls.
• Kill switches and exit strategies
If a vendor becomes a liability, the bank must be able to isolate or terminate access immediately. Exit strategies protect the financial institution from ongoing exposure.
Top 10 Critical Cyber Threats Businesses Need to Be Prepared for in 2026.
What to Do Now
2026 is not a distant deadline. Institutions must begin strengthening their vendor oversight today. The sooner they establish continuous monitoring, the easier compliance becomes.
- Most organisations underestimate how many vendors interact with their systems. Create a complete list. Include cloud apps, managed services, consultants, and API partners.
- A vendor with admin credentials carries more risk than one providing office supplies. Rank them by access level, data sensitivity, and dependency.
- High-risk vendors should be part of real-time oversight. This may include vulnerability scanning, attack surface monitoring, and security scorecards.
- Don’t wait for a breach. Build clauses requiring regular assessments by NIST cybersecurity auditors or ISO 27001 information security auditors, along with clear breach response expectations.
- Build an incident response plan that includes vendor breaches
The threat landscape in 2026 has shifted decisively toward third-party exploitation. Most breaches now originate from vendors, not internal systems. Traditional due diligence cannot keep pace with continuous threats, and regulators are raising the bar on oversight. Financial institutions must evolve—from annual questionnaires to real-time vendor monitoring, automated scoring, enforceable contracts, and strong incident response planning.
Every vendor carries exposure. Attacks on supply chains have become the most common pathway into financial networks. Regulators, insurers, and attackers all expect stronger governance. Passive oversight is no longer defensible.
Cybernetic Global Intelligence helps organisations establish real security—not checkbox compliance. Our cyber security audit services, NIST cybersecurity auditors, and ISO 27001 information security auditors provide independent assessments that strengthen your entire vendor ecosystem.
Contact CGI today to secure your supply chain before 2026 changes the rules for everyone.