Pushing data governance up the agenda: from the British Computer Society.
Data governance is a must-have corporate initiative, says Colin Rickard, Managing Director, EMEA, DataFlux. The financial services industry is a good case in point showing the need for a coherent approach to data management. But where should you start?
When the Financial Services Authority (FSA) recently released a consultation outlining that banks should spend nearly £1bn on IT upgrades as part of an extensive overhaul of the Financial Services Compensation Scheme (FSCS), it proposed that a large £200 million chunk of this investment should be focused on obtaining a single customer view.
Banks were tasked with reducing duplicate entries for the same customer in databases as well as integrating data from disparate systems and data warehouses. With a single customer view, a bank can reach customers, quickly and simply, while more reliably complying with FSA regulations.
In order to adhere to such proposals, most banks are considering, or have already implemented, strategies to support data governance, the corporate initiative built around data quality, integration and management.
This helps banks maintain up-to-date information as well as create a single, consistent set of policies and processes for monitoring and managing their corporate data. As banks have more confidence in their data, consumers will, in turn, show more confidence in the UK banking system.
A recent research study commissioned by DataFlux asked large UK financial services firms with over 500 employees about their views on data regulation and current data management practices. The results showed that 86 per cent of organisations surveyed viewed data as an extremely important strategic asset.
Findings also indicated that the sector is already looking at data governance projects, one-third of respondents have already implemented in this area with about the same number (32 per cent) considering implementation in the near-term.
Risk mitigation
Mitigating risk is a foundation of good banking practice. When respondents were asked to identify the driving force behind data governance investment, 73 per cent cited compliance ahead of operational efficiency. There is a need for financial service organisations to accurately know who their customers are and pay attention to what their data is telling them, or they may find themselves exposed to significant risk.
By assembling a cross-company team, assigning responsibilities and defining both processes and policies for how data is managed, a plethora of risks can be understood and managed.
For example, data governance can help to assure regulatory reporting related to the Basel II Capital Directive, helping a bank to trust the accuracy of calculations provided to the FSA. By integrating data, financial institutions can know more about the customer base and more effectively spot bad loans before they are made.
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