Technology Warranties: Vendors Find a Ready Market in Financial Institutions

Over time, security budgets have diminishing returns. At some point, no increase in resources will reduce the risk of a negative consequence. That’s why cybersecurity insurance exists — to protect against the eventuality of a data breach. That’s also why some vendors have seized on the idea of guaranteeing the efficacy of their products through technology warranties.

To many, such warranties are a marketing ploy — a tactic meant to shift attention from a vendor’s competitors in a crowded marketplace. But to others, warranties are a sign that vendors are shifting their incentives — putting more than just their reputations on the line. This report will focus on the latter and attempt to elucidate the value of these warranties for both technology buyers (of a certain size) and sellers.

Key questions discussed in this report:

• What is a technology warranty? 
• What is the value of such a warranty when backing a security product?
• What kind of FIs might find value in security technology warranties? 
• How are these warranties being underwritten? 
• And why are so few security vendors offering this type of added insurance?