BFSI Market Update: Managing risks through contracts

The strongest message is this: contract management is not an administrative support activity. It is becoming part of the sector’s operating model for resilience, oversight, and accountability. In the WorldCC banking, financial services and insurance benchmark, contracts sit at the core of the business, but the sector still struggles to balance visible compliance with the speed, adaptability, and insight that modern markets and regulatory authorities demand. Contract management remains a largely defensive discipline and that needs to change: AI offers an opportunity for fresh thinking.

This tension matters in regulation. The sector is expected to show control, but control is not the same as paperwork. A contract repository, standard templates, and approval gates may create evidence of activity, yet they do not automatically create better decisions, faster response, or clearer accountability. The real issue is not whether the sector takes risk seriously, it is whether current contracting practices turn risk information into timely action and the executive insight needed for continuing improvement.

What the sector is telling us about current challenges?

The banking, financial services and insurance sector is heavily oriented toward risk mitigation and compliance. In fact, 85% rank risk mitigation and management as the top objective for contract management. At the same time, the sector’s measurements remain too focused on monitoring the past, rather than encouraging improvement, adaptability, and business change. Less than 10% view contract management as a source of proactive quality management, in large part because it does not deliver consolidated and actionable data.

This is a familiar pattern. Organizations build systems to drive efficiency in one place, then discover those same systems make them slow in others. Contracting is case in point, where data is scattered across multiple systems, making informed action and diagnostics highly manual activities. This drives an approach focused on rigid standardization, which the results in ever-increasing tension when markets require adaptability and resilience. in BFSI, the benchmarks this shows up as strong use of standard templates, high post-signature monitoring, and growing risk-scoring capability, but weaker authority for contract teams in drafting, development, and front-end commercial design.

There is also an organizational issue beneath the surface. In this sector, 66% have dedicated contract and commercial management resources, and 59% operate with centralized or center-led models, which is above the cross-sector average. Yet more than one in three still say roles and responsibilities in the contract management process are variable or unclear, and contract management is often merged with supplier relationship management in ways that can create blurred objectives. This is a structural problem, not due to individual skills. People are doing sensible things inside systems that were not designed for joined-up accountability or adaptive business capability.

The opportunities are bigger than efficiency alone

The sector is not standing still. Executive interest is rising, with 47% reporting increased executive focus on contract and commercial management. The leading priorities are increasing strategic relevance and demonstrating value, cited by 70% of respondents, alongside improving internal processes and expanding the role of the function.

What is especially interesting is where the sector is already leaning forward. Banking and financial services organizations show stronger than average focus on contract analytics, benchmarking, market research, segmentation by relationship type, and ESG. They are also ahead in some technology areas, including repositories, risk scoring, post-signature compliance monitoring, and integration with key applications. That suggests the barrier is no longer awareness. It is commercial design - how to connect these tools and data flows to better governance, clearer ownership, and faster intervention.

But in spite of these encouraging signs, the sector remains highly template-driven - 85% use fixed templates - and only 12% operate with a terms database that allows more flexible contract assembly, compared with a 20% cross-sector average. That matters because resilience depends on the ability to adapt commitments to the transaction and relationship, not simply to impose standard wording. In other words, consistency matters, but rigidity becomes its own risk.

Some key questions

First, how does your organization currently see contracts in the control environment? Are they viewed mainly as legal artifacts and evidence files, or as active instruments for managing third-party risk, operational resilience, service continuity, and accountability? That question often opens the door to a much richer discussion on the emerging purpose of contracts in an AI-enabled world.

Second, explore the gap between oversight and action. The evidence from our research suggests the sector has invested in monitoring, but often gives too little authority and too little design attention to the people managing commitments before problems arise. So the question becomes: how can regulated firms move from retrospective compliance to forward-looking commercial governance?

Third, discuss capability. Organizations in this sector increasingly need people who combine relationship management, communication, analytics, and influencing skills, going far beyond technical contract review and oversight. As the role grows, success depends on stronger business cases, better internal alignment, and closer partnership across legal, procurement, operations, and risk functions.

Potential areas for collaboration with WorldCC

World Commerce & Contracting can support capability building - a dialogue on what good looks like for contract and commercial management in regulated environments - especially where resilience, third-party oversight, and accountability intersect. That could include roundtables, benchmarking, process maturity and skills assessment, and guidance on governance models, metrics, and skills.

There is also a strong case for collaboration around trust and relationship design. Both regulators and firms want stronger outcomes, but too often the system pushes buyers, suppliers, legal teams, and business units into defensive behavior.

Our wider research shows that unclear roles, unrealistic expectations, and weak internal alignment are major barriers to collaboration, and those barriers directly affect resilience. This is where the 2025 Global Contract Management Standard has a major role to play. So this is not just about better contracts. It is about better operating relationships around those contracts and accelerating the journey to contract management as a critical source of business intelligence.