Financial institutions are increasingly cautious regarding their Governance, Risk, and Compliance (GRC) software vendors, with many firms opting to maintain existing systems rather than switch providers. While operational risk remains a top priority, bank executives are prioritizing internal development and targeted point solutions over broad, enterprise-wide vendor transitions, according to industry analysis.
Why Banks Are Hesitant to Switch GRC Vendors
Major banks are showing a marked decline in plans to replace their primary GRC platforms. According to Risk.net’s 2026 Operational Risk Benchmarking study, this trend stems from the high costs of migration, complex integration requirements, and a general sentiment that current offerings are "adequate."
Rather than undergoing a complete system overhaul, firms are increasingly adopting a "build or buy" hybrid approach. This strategy allows banks to keep core GRC infrastructure in place while building bespoke modules for emerging threats, such as AI-related risks and advanced cyber vulnerabilities. By retaining legacy systems, firms avoid the operational disruption associated with enterprise-wide software migrations while addressing specific regulatory pressures.
The Impact of AI on Risk Management Frameworks
Artificial intelligence has become the fastest-growing area of regulatory scrutiny, forcing banks to rethink their risk frameworks. The European Union’s AI Act is currently the primary driver for these changes, influencing bank policies even outside of the European bloc.
Banks are currently struggling with fragmented accountability for AI risk. Research indicates that many firms lack the necessary internal controls to manage AI-driven threats effectively. As a result, the "second line of defense"—the risk management and compliance functions—is aggressively seeking to centralize oversight of AI adoption. Firms that fail to formalize these frameworks face potential regulatory breaches, especially as regulators demand more granular reporting on model governance.
How Third-Party Risk Management (TPRM) Differs
While general GRC vendor reviews have slowed, Third-Party Risk Management (TPRM) remains a notable exception to the trend. As banks face tighter regulations regarding supply chain resilience and digital operational continuity, they are investing more heavily in specialized tools to monitor external partners.
The DORA (Digital Operational Resilience Act) in the EU has mandated that banks adopt more rigorous standards for managing third-party providers. Consequently, banks are not just sticking with legacy GRC vendors for TPRM; they are actively seeking out niche providers that offer better automation for supply chain mapping and real-time vulnerability tracking.
Comparing Investment Priorities
The shift in strategy reflects a broader move toward operational resilience rather than just regulatory compliance.
| Risk Category | Strategy | Primary Driver |
|---|---|---|
| General GRC | Maintain/Build | Cost efficiency, integration complexity |
| AI Risk | Build/Internalize | Rapid regulatory shifts, lack of specialized vendors |
| TPRM | Buy/Switch | Mandatory compliance (DORA, etc.), supply chain complexity |
What Happens Next for Financial Institutions
Firms will likely continue to face pressure as cyber risks and AI adoption evolve. Experts suggest that the next phase of operational risk management will focus on integrating "resilience" into the design of new products rather than bolting on compliance measures after the fact.
For many banks, the challenge remains the "tech debt" created by fragmented software stacks. As these institutions look toward 2026, the ability to consolidate data from disparate systems—without necessarily replacing the entire GRC vendor—will determine which firms effectively manage their capital requirements and regulatory standing.
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