The Basel Committee on Banking Supervision has published a new set of principles aimed at strengthening the sound management of third-party risk across the global banking sector, reflecting the growing reliance of banks on external service providers as financial services continue to digitalise.
The principles are designed to establish a common baseline for both banks and supervisors when managing risks arising from third-party arrangements. These risks have expanded significantly in recent years as banks increasingly depend on a broad range of external providers, including technology vendors and FinTech firms, for services that were previously carried out in-house. The Committee said the rapid digitalisation of finance has accelerated the adoption of innovative approaches, increasing operational complexity and interdependencies across the banking ecosystem.
By setting out a harmonised framework, the Basel Committee aims to promote greater consistency in how third-party risk is identified, assessed and managed across jurisdictions, while still allowing sufficient flexibility for banks and regulators to account for local regulatory frameworks and evolving industry practices. The principles are intended to support resilience in the banking system at a time when outsourcing, cloud computing and technology partnerships have become central to day-to-day operations.
The new guidance builds on feedback received during the Committee’s previous consultation process and reflects a more diverse and extensive third-party service provider landscape than was envisaged under earlier frameworks. As a result, the principles supersede the 2005 Joint Forum paper Outsourcing in financial services as it applies to the banking sector, updating expectations to better align with current market realities and supervisory priorities.
A key focus of the principles is ensuring that banks retain clear accountability for activities performed by third parties, even where services are fully outsourced. The guidance emphasises the need for robust governance, comprehensive risk assessments and ongoing monitoring of third-party relationships throughout their lifecycle. This includes consideration of concentration risk, operational resilience and the potential systemic impact of disruptions at critical service providers.
The Basel Committee also underlined that it will continue to monitor developments linked to the digitalisation of finance and financial technology from a prudential perspective. As banks further integrate RegTech, FinTech and other digital solutions into core operations, the Committee signalled that supervisory expectations will continue to evolve in line with emerging risks and market practices.
The publication of the principles marks another step in the Committee’s broader efforts to ensure that global banking regulation keeps pace with structural changes driven by technology, outsourcing and increasingly complex third-party ecosystems.
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