Metro Bank's procurement team has joined others in using FSQS to tackle GDPR ©Philip Hartley/Metro Bank
Metro Bank's procurement team has joined others in using FSQS to tackle GDPR ©Philip Hartley/Metro Bank

Why Metro Bank is collaborating to tackle third party risk

Financial services firms are uniting on a shared system for supplier qualification

Since the 2008 financial crisis, regulation in the financial services sector has become increasingly complex – and an even larger issue for procurement. “Third party risk is the next big issue hitting [the sector],” says Joe Bakowski, head of procurement at challenger bank Metro Bank. “There are worries about cyber security, national infrastructure stability and data protection.” 

For Bakowski, running a procurement function at a start-up bank meant having little infrastructure in place to deal with the amount of work required to deeply understand supply chain risk. “While 95% of work [around supplier assurance] is about ticking boxes, the other 5% is gold dust,” he says. “And you can’t get to it without doing the rest of the work.”

FSQS, a supplier qualification system for the financial services community (run by supplier information and risk management firm Hellios) aims to make that work less of a burden for the procurement teams. Bakowski, who chairs the group, says: “It’s about joining forces and coming up with a standard that works for buyers and supplier, taking the pain away from everyone.” The group is currently made up of procurement leaders from 13 firms, including Nationwide, Lloyds Banking Group, TSB and Santander.

The system aims to standardise and manage compliance and assurance data for the organisations involved. The CPOs collaborate on supplier questionnaires, working towards an industry standard that all suppliers will need to adhere to. There are about 600 questions in the system, says Bakowski, although no supplier would have to answer all of them. For example, a building contractor would focus on health and safety, while information security would be critically important for a data processor.

Using the questionnaire allows Bakowski and his peers to quickly filter out weak suppliers and ensures they ask the right questions and make the appropriate checks during site visits to those more strategic suppliers. “It means we can ask ‘show me that control’ or ‘how does this work?’” he says.

FSQS is a living tool, in that it evolves as regulation does. For example, the Modern Slavery Act led to a new set of questions being added, as has GDPR (see below).

Collaborating with competitors on collective challenges brings a number of benefits. For a start, it’s efficient. “If all 13 of us share the same problem, the workload is one thirteenth what it would have been,” says Bakowski. “Suppliers are also more likely to answer when 13 people ask them the question, rather than just one.” It also helps keep costs down across the sector, and allows for networking and sharing of other expertise.

Jonathan Hughes, head of procurement and estate at Shawbrook Bank (another firm in the group), adds that the “whole concept hinges on the respect of competition”. “It’s obvious to me what I want to share and what I don’t,” he says. “Where we can work together towards a common goal, it can only be a benefit to share information. It’s about sharing best practice and energy.”

 

GDPR ready

 “Many of us are still trying to get our heads around GDPR,” says Shawbrook Bank’s Jonathan Hughes. Collaboration via FSQS has been vital in helping to develop procurement professionals’ understanding of the new data protection regulation. Members created a sub group, working with colleagues in legal and risk, to develop appropriate questions for suppliers, a challenge given this is an area with little precedent or existing best practice. This collaboration also enabled them to share contacts, such as putting each other in touch with external GDPR experts.

“Getting procurement teams together to have that conversation [has been] a massive benefit”, says Hughes. “We are all working on the same thing.”

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