Solving the puzzle: integrated datamanagement at banks

Lists are coming in abundance nearing the end of year. What are the trends and challenges facing banks in the coming year and possibly years ahead? Although some accents can change some terms will always make up the list: the fast impact of technology, the potential of data and AI, the purpose as bank for clients, sustainable banking, the impact of regulation. These driving forces for banking of the future can not be viewed in isolation. They enable and impact each other. The fast moving landscape of technology has urged banks to reinvent what they can be for clients. Demands of environment and society has rapidly changed the way banks look at their purpose. How to choose and where to focus? Underpinning the strategic dilemmas is the capability of the organization in making informed decisions grounded in insight in their data. 

Where are we now?

The Great Financial Crisis was a wake up call that when senior management lacks the appropriate insight and understanding it is impossible to make decisions necessitated by the circumstances. At present a lot has changed. The role of the supervisor has drastically changed. In January 2013 the Basel Committee published the principles for effective risk data aggregation and risk reporting urging banks to get their data management right, since without the proper foundation the house will crumble. At present banks are finding themselves on a scale where data is recognized for its huge potential (data is the new gold, oil, etc..) but at the same time complying with the minimum requirements as set by regulator is still a struggle. Here I want to make a case for an integrated view on data.

Capitalizing on the potential

Photo by Chris Liverani

The potential of data is in really knowing the customer and the products, its risks and opportunities. Data on income statements, financial information, legal entity, (risk)performance etc.. is stored in the datalakes and warehouses of the bank, but not always is all the information available ready at hand at the place where it is needed most. Customer service could improve if relationship managers in all product departments had direct insight in the total needs of the client. Analysis and insight can enable development and sale of new products fitting the need of the client and help the bank to focus its service providing. But also that when risks materialize the bank takes the appropriate action. 

Battling siloization

Photo by Waldemar

The potential is generally recognized but the puzzle is difficult to solve. The risk of ‘siloization’ is ever present, with department / functions working next to each other and having their own systems, datamanagement and dataprocesses. Recently the BIS published their progress report on the adoption of Principles regarding datamanagement of risk data. Regulatory requirements on datamanagement can be viewed as a must-do shaped in a separate siloed initiative to remediate the deficiencies. In this way the opportunity to reshape the data organization is lost. Truly embracing the call to make some drastic changes will put organizations in a prime spot not just to comply but also to take advantage of the vast amount of digital potential stored in their systems.

Moving forward

What are fields where the most important decisions are being made? What can we do to get to a place where the different perspectives on datamanagement regulatory, risk, financial and commercial are all coexisting in harmony and unlocked for their full potential? Three themes will prove critical in realizing an efficient and effective data organization:

• Simplifying the landscape: Many traditional banks have been using core banking systems for several decades. It is often a massive challenge to replace or amend it and this is preventing organizations from engaging in the task. However for the current demands on granular and detailed data the systems are often not sufficient and (manual) workarounds are needed. A redesign of the IT landscape is necessary for all perspectives to be incorporated. New technology can help with challenges of today, for instance a data hub replaces the need for point to point integrations and sends data directly to business applications simplifying and at the same time rationalizing the IT landscape.
• Governance & ownership: While the IT landcape is the foundation, without focus there is no direction. This begins in at the top where data needs support and direction. Down the line determining clear owners for data and dataquality is critical as well as establishing mechanisms through which parties within the organization can agree on the terms of exchange and use of data. 
• Flexibility in data onboarding: Business needs, data regulations and data needs change frequently. Flexible data onboarding allows organizations to adapt to changing business requirements and stay compliant with evolving data protection laws and regulations without significant disruptions. Clearly define metadata rules, data quality assurance and tooling to support different data formats and sources is key in this respect.
  
  

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