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Financial institutions making progress on data objectives

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The EDM Council’s benchmarking study on the state of data management across the financial industry, has revealed that the concept of data management is gaining a strong foothold in financial institutions.

The survey included banks and other financial institutions of all sizes and industry segments and demonstrated strong progress in getting the discipline of data management integrated into business operations. 
 
The need for improving data management capability was one of the outcomes of the 2008 financial crisis to support global regulatory requirements for mitigating systemic risk and the survey found that data management is now moving out of technology and into new control functions either a combination of IT/operations (34 per cent) or newer enterprise data management functions (21 per cent).
 
In addition, most data management programs are newly established as formal initiatives, with 41 per cent established in the last year and 42 per cent within one to three years, while financial regulatory oversight is a catalyst for expediting data management activities, with 84 per cent of respondents citing that BCBS 239 and other regulatory requirements like CCAR and Basel III are the primary drivers for their data management programs.
 
The impact of BCBS 239 is of particular concern for Tier 1 firms, with 78 per cent rating it as the primary concern, compared to 57 per cent for Tier 2 firms.
 
Data governance maturity meanwhile, is formed and in the process of being operational (43 per cent) or fully operational (37 per cent) at the majority of the firms surveyed
 
The EDM Council’s benchmarking included responses collected by the Pellustro survey platform from over 234 financial institutions in North America, Europe and the Asia Pacific.  It was derived from the Council’s Data Management Capability Assessment Model (DCAM) – a set of standard criteria used to measure data management functions and processes. The benchmarking survey covered 21 of the most critical concepts related to effective data management including: the adoption of data quality processes, the implementation of standards needed to achieve data comparability across the financial system, the establishment of strong governance to ensure successful data integration and the ability to aggregate data needed by regulators in order to monitor threats to stability across the global financial system.
 
The results of the benchmarking survey verify that the concept of data management is gaining a strong foothold across the financial industry.  The survey demonstrated that financial institutions have created sustainable programs around data management, funded their implementation and hired executive officers to manage their efforts.   
 
According to Michael Atkin, the EDM Council’s Managing Director: “The practice of data management is now established as a sustainable process within financial institutions.  This activity represents a recognition of the role of trusted data in helping to unravel the interconnections needed to understand the complexity of globally linked financial markets.” 
 
The EDM Council partnered with Sapient Global Markets to conduct the benchmarking study.  Sapient is a long-standing advocate for enhancing data management, supporting numerous financial services clients to overcome the operational, audit, regulatory and architectural challenges through advisory and implementation of data quality, management, architecture and strategy projects.
 
According to Gavin Kaimowitz, Director of the Data Management Practice for Sapient Global Markets: “Accurately measuring the current state of data management across the financial industry is an essential prerequisite for establishing it as a sustainable component of business operations.  Our collaboration with the EDM Council was designed to define the current state and point to the future direction of data management for the global financial industry.”
 
The importance of data harmonisation was one of the conclusions of the Basel Committee on Banking Supervision and has been expressed as a mandate for financial institutions to support regulatory requirements for stronger risk data aggregation.  The benchmarking survey reinforces financial regulatory oversight as a galvanising force for expediting data management activities that were already underway among financial industry participants. The benchmarking results verified that financial institutions are making good progress in establishing the underlying governance requirements needed to integrate data management into the culture of financial institutions. 
 

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