The stage is set for chief data officers (CDOs) to bring direction to data management strategies for bank data systems, helping the banks remain compliant and unleash the commercial potential of information.
Despite the importance of data, banks have struggled to make the most of this precious yet abundant resource, including data governance for capital markets data. Whether reporting to regulatory authorities, or providing analysis and support for trading, investment, risk management and loan decisions, banks and other financial institutions routinely suffer from incomplete data from a huge number of sources. This absence of data quality results in slower response times, higher costs, loss of trust, increased regulatory scrutiny and missed business opportunities.
A CDO can help fill this data risk management vacuum, by offering a central point of contact and providing the coordinated data governance necessary to enable stewardship and data quality assurance across the organization.
Financial services organizations today are under constant pressure to demonstrate sound risk management. Regulators expect accurate and complete reporting, signed off at board level, to prove an absence of unauthorized trading and corruption. This requires both accurate reports and high quality data, combined with effective and pragmatic data ownership and governance. Failure to meet such requirements, or prove that controls are in place to spot discrepancies, can lead to fines and higher capital limits that push up costs.
In the fast-moving banking environment or trading room, it is easy for incorrect data to be entered, and worse still, be labeled in a multitude of ways, making it extremely difficult to trace. As multiple extracts use this source data and proliferate it to various warehouses, models and reports, the error is then multiplied a hundred- or thousand-fold.
Most, if not all, banks lack a person or team responsible for assuring quality and standardization of inputs and outputs, and coordinating information across complex organizational structures. The chief information officer (CIO) is typically not a data expert. Ownership and responsibility for data should rest jointly with business owners, modelers of source data in finance and risk management, and the initial ‘producers’ of the data in the front office.
A CDO can guide them, as a ‘custodian’, rather than an owner of data, as this person and their team creates a more accurate, orderly and up-to-date information flow from the source (point of input) to the point of consumption (reports, models, analysis, dashboards).
The CDO needs to work in conjunction with IT and the business to:
Many organizations struggle to articulate the value of enabling data quality beyond establishing basic discipline to enable regulatory and management confidence. CDOs have line of sight into efficiencies in the area of third party data spend and sourcing simplification. They can also add value through finance, risk and the lines of business where the CDO is focused on improving analyst cycle times and model development efficiency. This leads to improved targeting, pricing, more predictive credit and liquidity models, and better capital planning.
An effective CDO must understand the organizational data value chain and foster a structured, sustainable approach to data management, with appropriate controls, providing oversight of enterprise data programs and implementing enterprise-wide data governance that is ingrained into the management fabric.
Although not all financial institutions have chosen to appoint a CDO, such a position has enormous potential to speed up response times to regulatory demands, reduce data management costs and use information to drive important strategic decisions.
KPMG in the US
+1 312 665 8410
KPMG in the UK
+44 20 76942330
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