Third-party risk management (TPRM) has become one of the biggest operational bottlenecks inside financial institutions. Every new fintech partner, cloud provider, payment processor, or critical vendor introduces another wave of security questionnaires, SOC reports, contracts, policies, and compliance documentation that must be reviewed before business can move forward.
As FIs continue expanding their technology ecosystems, the traditional TPRM model is becoming harder to sustain. Risk teams are expected to review more vendors than ever before while meeting growing regulatory expectations around oversight, documentation, and ongoing monitoring. Yet many institutions still rely on legacy tooling, spreadsheets, email threads, and manual document reviews to complete work that consumes hundreds of hours each year.
The Real Cost of Manual Reviews
A typical vendor review requires analysts to examine hundreds of pages of documentation. They compare SOC reports against internal controls, extract contractual obligations, review information security documentation, review vendor questionnaires, calculate inherent and residual risk, identify control gaps, and document findings and issues.
These tasks require experienced professionals, yet much of their time is spent gathering and organizing information rather than evaluating risk.
That gap between effort and expertise is where a new generation of AI native platforms is beginning to change how financial institutions approach TPRM.
Building Better TPRM Workflows
Rather than simply digitizing existing processes, companies like Kobalt Labs are embedding AI agents directly into the review process to handle the repetitive, document heavy work that slows teams down. AI can extract evidence, map controls, review contracts, identify missing information, flag regulatory concerns, and generate preliminary risk assessments in minutes instead of weeks. By the time a human reviewer begins evaluating a vendor, much of the groundwork has already been completed.
The results are immediate. Across Kobalt Labs customers, institutions that previously ran six to eight week review cycles are now completing them in under two weeks, a reduction in overall review time of roughly 75 percent. That time is returned to subject matter experts, allowing them to focus on complex risks, exceptions, and the final approval decisions that require deep human judgement. Institutions of all sizes are seeing similar speedups, including Core Bank, Chesapeake Bank, Zions Bancorp, Emprise Bank, ORNL FCU, Chime, and Upstart.
The Future of Risk Operations
TPRM is emerging as one of the most practical and impactful applications of AI in financial services because the work is structured, document-intensive, and high-volume, which is exactly where AI can deliver the most immediate, measurable value.
The next generation of risk operations will be built on smarter infrastructure that enables experienced risk professionals to spend their time where it matters most: applying their expertise and scaling vendor oversight without compromising governance in an increasingly complex risk landscape.
This piece was selected through FinAi News’s sponsored pitch competition. Kobalt Labs is an AI native platform for compliance and risk operations, used by banks, credit unions, and fintechs to automate third party vendor risk review and enterprise risk management workflows.
