Financial firms are falling short on data management issues such as calculating the true cost of data, identifying the operational cost savings of improved data management and embracing social media data, but according to research by consultancy Capco, these issues can be resolved with a cross-organisational and practical approach to data management and the development of a data culture.
The business and technology consultancy’s report – ‘Why and how should you stop being an organisation that manages data and become a data management organisation’ – is based on interviews with towards 100 senior executives at European financial institutions. It considers the many approaches to data management across the industry and within individual enterprises, as well as the need to rethink data management. It states: “There is one certainty: data and its effective management can no longer be ignored.”
The report suggests an effective data management culture will include agreed best practices that are known to a whole organisation and leadership provided by a chief data officer (CDO) with a voice at board level and control of data management strategy and operational implementation. The CDO could be supported by data stewards across lines of business who would be responsible for practical execution of strategy, and would adopt enabling technologies manifested in developments such as data fabric.
Arguing that market developments, a growing burden of regulation and the need to shorten time to market for new products are all driving increasingly complex data management requirements, Capco states ‘doing data differently has become imperative’.
If that is the vision, the reality, at least at the moment, is somewhat adrift. According to the consultancy’s key research findings: awareness of data policies is low among financial institutions; nearly a quarter of the firms surveyed do not understand how data affects profit and loss; nearly half of them manage customer data as a regulatory compliance issue without considering revenue potential; and a vast majority of 80% have not explored the use of social media data and do not understand its value.
On the near neglect of social media data, despite such channels’ emerging use to promote products, Capco partner Lee Murdoch says: “The potential data sets in social media, such as tweets, are huge and financial institutions are faced with targeting a very large universe. Identifying meaningful patterns in social media is time consuming. There is no silver bullet solution.” Highlighting the lack of commitment to unstructured data, firms showed no top priority on how they would use the data. Instead, reducing risk, driving innovation, increasing revenue and lowering costs were all mentioned fairly evenly as top ranking possibilities.
Turning the situation around and attaching practical solutions to the data management vision of an all-encompassing data culture, Capco lists regulatory compliance, risk management, revenue increase, innovation and cost reduction as operational areas where good data management can have a measurable and positive effect on profit and loss.
Setting out how an organisation can create an effective data culture, Capco notes the need to change from being an organisation that is obliged to do a certain amount of data management, to a mandated and empowered data management organisation in which data has ongoing recognition as a key primary source. The report concludes: “Every organisation has the potential, as well as the need, to become a true data management organisation. However, the journey needs to begin now.”