MDM_Whitepaper_EDG_Finance

More documents

Recommendations

Info

ENTITY WHITE PAPER IS EFFECTIVE DATA GOVERNANCE A CHOICE OR A NECESSITY IN FINANCIAL SERVICES TODAY? IS EFFECTIVE DATA GOVERNANCE A CHOICE OR A NECESSITY IN FINANCIAL SERVICES TODAY? INTRODUCTION The global banking industry is experiencing a period of uncompromising change that will permanently alter its shape, its ways of doing business, its winners and its losers. “Flowing complete, accurate, timely data to the people and processes that need it is the lifeblood of a modern organisation.” Ambuj Goyal, IBM Data Governance is the activity of co-ordinating people, processes and systems to ensure that the information that powers an enterprise is accurate and trustworthy. COST OF COMPLEXITY WITHIN BANKING SYSTEMS While the banking industry was one of the first to adopt the concepts of Enterprise Data Management, there is still a lot to do; effective Data Governance is a moving target and is still a distant dream for the vast majority of enterprises. In the last decade, the finance industry has witnessed constant mergers and acquisitions as the market has consolidated. This adds to an already complex system architecture map for most of these large organisations. Numerous legacy systems, a proliferation of product centric silos and duplicated data results in costly manual intervention and a loss of control. The integration of multiple systems over time has led to business rigidity rather than flexibility. In 2011, IBM’s Institute for Business Value estimated the cost of complexity for global banks to be $200bn. REGULATORY REFORM The 2008 financial crisis triggered an ongoing period of global and national regulatory reform. Banks are subject to a bewildering array of regulation including AML, KYC, SAMA, BASELII and Dodds-Frank and are fined huge sums for non-compliance. According to the 2012 Ernst and Young survey, “Progress in Financial Services Risk Management”, the scope, timing and potential impact of regulatory reform was the top challenge noted by almost 75% of respondents. Regulatory reform necessitates making risk “everyone’s business”. Modern Banking is both “data driven” and “data dependent”. It logically follows therefore that the effective management of the data in the enterprise should be everyone’s business. To truly make it so and by treating data as an “Enterprise Asset” requires an effective Data Governance programme. Regulation relating to capital requirements in banking groups (also known as regulatory capital or capital adequacy) will also create ripples along the information management supply chain. Investment banking operations are being ring-fenced, and regulators require that these operations report risk both independently and at group level. This will strain banking systems’ architecture, integration, data quality and Data Governance processes. 2 Failure to provide regulators with the information they require, in the format they require, when they ask for it, adds reputational risk to the plethora of risks already facing a modern bank.
IS EFFECTIVE DATA GOVERNANCE A CHOICE OR A NECESSITY IN FINANCIAL SERVICES TODAY? ENTITY WHITE PAPER Compliance is largely a costly and painful activity whose prize is the right to operate. From a data management perspective, however, its side effects are hugely beneficial as trusted, quality data that is available and usable in an appropriate form, at the point of need, has major advantages. These benefits can be felt in all business functions, whether retail banking, commercial banking, finance, risk, or marketing. CUSTOMER CENTRICITY Historically, the banking business model was built in product centric silos and paid no heed to a holistic view of the customer relationship. Today, however, customers expect banks to offer them the right products, at the right price, when they need them (e.g. at important milestones in their lives), and wherever they choose to buy them. All channels, whether at the branch, through customer service, online, or via mobile banking, should be incorporated. This requires trustworthy, relevant, consistent and timely information about customers. An enterprise level single view of customer data, spanning all aspects of the customer relationship and including household and social data, is fundamental, to be able to offer the right product combination, in real time, and to maximise cross-sell and up-sell opportunities. Social media is changing the manner in which a bank communicates with many of its customers. It provides the opportunity for retail banks to communicate with, listen to, and build strong relationships with its customers. This improved interaction, however, will also heighten customer expectations. Not only do customers want 24/7 banking from an organisation that understands their particular circumstances but they also want immediate answers to their key financial questions, and they will gravitate towards organisations that can provide them. This will continue to fuel further rapid change in the industry. To capitalise on the opportunities presented by social media, banks will need to include Big Data in their Information Management and Data Governance strategies. In a tough, mature market, with significant regulatory constraints, growth is reliant on nurturing the right relationships with the right customers. INFORMATION SECURITY & PRIVACY Research conducted by the Economic Intelligence Unit has identified that IT Security is high on banks’ list of priorities; this is understandable given the reputational risk associated with security breaches and data theft. With data managed across a complex network of internal and third-party systems, almost 90% of respondents in this report MANAG stated that failures have severe consequences for compliance. Furthermore, protecting personal data and preventing fraud is the minimum that customers expect from financial organisations. The cost of getting these wrong is high in terms of fines, loss of business and damage to the brand. Effective management of each of the above issues is essential for banks to achieve compliance and to retain and build competitive edge in this new era of banking. Transparent data for regulatory reporting, customer centricity to increase uptake of personalised financial products, trustworthy management reporting, and an enterprise view of risk and liquidity are the pillars on which this competitive edge can be built. The drivers for accurate and governed information at an enterprise level dominate today’s banking industry. Right now, effective Data Governance within banking is not a choice, but a necessity. 3
Page 1: ENTITY WHITE PAPER IS EFFECTIVE DAT
Page 5 and 6: IS EFFECTIVE DATA GOVERNANCE A CHOI
Page 7 and 8: IS EFFECTIVE DATA GOVERNANCE A CHOI

MDM_Whitepaper_EDG_Finance

Create successful ePaper yourself

Delete template?

Save as template?