Transactions Involving Financial Services Companies • 227
is chapter discusses the unique challenges faced by nancial services
companies (e.g., banks, broker-dealers, insurance companies) when they
enter into technology contracts. As with any customer entering into a con-
tract for the use or acquisition of technology, nancial services companies
must be concerned with warranties, indemnities, scope of license, state-
ments of work, intellectual property ownership, and the dozens of other
issues common to agreements of this kind. ese issues are discussed in
depth in other chapters of this book. Here, however, we are going to focus
on the additional, unique risks and concerns nancial services companies
must address in contracting for technology.
ere are essentially two driving forces behind these unique risks and
concerns. First, these types of entities are in the business of handling very
sensitive data. As such, their attention to issues such as condentiality
and information security is greatly heightened. Second, nancial services
companies are some of the most highly regulated entities in the world.
ey are subject to a wide range of state, federal, and in some instances,
international laws and regulations regarding almost every aspect of their
operations. In addition, they receive frequent “guidances” or recommen-
dations from their regulators that must generally be followed. Some of
these laws, regulations, and guidances impose obligations on nancial ser-
vices companies to seek specic protections in their technology contracts.
Finally, nancial services companies are generally very conservative in
their approach to vendor contracting. e foregoing, however, frequently
creates signicant tension between the need to control risk and the busi-
ness imperative to “get deals done” and ensure the company’s products
and services get to market in a timely fashion.
Many technology vendors are unfamiliar with the unique nature and
strict regulatory requirements under which nancial services companies
operate. It frequently comes as a surprise to the vendor that regulators of
nancial services companies conduct audits of the nancial service com-
pany’s technology contracts to ensure they conform to applicable law and
provide the level of protection appropriate for these heavily regulated enti-
ties. Because of the foregoing, customers must be ready to explain their
unique requirements to their vendors and even provide documentation
from their regulators to establish the basis for their concerns.