U.S. Regulators Tighten Scrutiny of Community Banks’ Core Tech Providers

U.S. community banks rely heavily on a concentrated group of core service providers for transaction processing, account management, payments, compliance and online banking. That dependence can make a vendor effectively irreplaceable: an outage, cyber incident or aging platform can disrupt nearly every bank function, while opaque pricing and restrictive contracts can impede oversight or switching. Regulators view these providers as community banks’ most material, complex and highest-risk third-party relationships.

On Sept. 11, 2026, the Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency issued a joint statement saying provider transparency, contract features and technology capabilities will influence how they allocate examination resources and pursue enforcement. The same three agencies, joined by the National Credit Union Administration, proposed broader, non-binding third-party risk-management guidance that would replace existing guidance when finalized. Comments are due 60 days after publication in the Federal Register.