Long time Asset Control customer ABN Amro is pursuing an ambitious strategy to centralise reference data delivery across the whole of the group, including wholesale, retail and asset management. The strategy is underpinned by four data “pillars”: client and counterparty data, market data, instrument pricing and corporate actions and common reference data (currency and exchange codes and settlement calendars, for example). The bank’s global head of reference data Grant Goldfinch says there are many issues and challenges to be faced when embarking upon such a strategy, but he advises institutions taking a similar approach to “measure successes, measure costs benefits and continue to track this”, as “it will pay dividends”.
Speaking at FIMA 2006 in London last month, Goldfinch explained that the bank’s reference data strategy was initially focused just on the wholesale business unit. A number of drivers, in particular the “many regulatory requirements coming into our landscape”, acted as the catalyst for the “sooner than expected” decision to create a shared service centre for reference data across business units, he said.Outlining the most significant challenge he faces in executing this strategy, Goldfinch said: “Though I have the role of global head of reference data, that doesn’t mean to say I own reference data across the whole of ABN Amro. My biggest challenge is finding and sourcing the different areas of reference data within IT and the business.” He went on to describe the complex balancing act required to govern and progress a programme spanning centralised, regional and local activities and requiring commitment and funding from numerous different stakeholders.
“A key part of the focus is to ensure we are realising tangible benefits and making linkages against business drivers for the bank and its business needs,” he said, adding that “different drivers mean more or less to different stakeholders”. There is a need to “understand the wider organisation and align to it”. It is no easy task to prove the link between improved reference data management and revenue generation, Goldfinch continued. One opportunity to do this at ABN Amro has been the creation of a centralised client data solution to support more effective cross-selling. Another imperative is agility, he said: “services need to be available quickly”.
With an initiative of this kind “funding… tends to be an issue”. “In a programme of this scale, there won’t be one source of funding. You have to manage and leverage multiple stakeholders. To drive funding and the business case you need to provide transparency of costs,” Goldfinch said. “You also need to engage, educate and get buy-in from stakeholders. Gaining acceptance is key.” It is fundamental that the scope of each service is clear, “to ensure that customers, existing and potential, understand what we are offering”. “If the service scope is clear, the service should be self-promoting, and this also enables potential users and customers to be able to approach you” if they think they could make use of a given service. There is always a chance that potential users will look elsewhere for the data they need “and the way to resolve that” is “as part of the service model… to give various options”, he said.
An important factor to consider when embarking on a strategy for centralised data management across numerous business units is managing the interplay between central, regional and local data functions. “Given the scale of the programme we are focused on, the target operating model had to recognise the differences between the central and local functions,” Goldfinch said. “We needed to clearly understand the roles of our centralised and regional and local responsibilities. We mapped out quite clearly what the central team would do – deliver the strategy, define the policies and standards and manage the overall programme. The focus for the regional and local groups is service delivery. We also leverage regional and local staff as ambassadors for the overall programme and centralised services.”
The relationship between central, regional and local functions is more complex than it might first appear, though. “Regardless of the fact that you are looking to centralise, you still need to maintain local coverage, and retain subject matter experts in each of the major hubs and most of the smaller locations,” Goldfinch said. While the central function will be “proactively going out and sourcing” data for reuse across the group, the regional and local functions will be more reactive, for example onboarding new clients and wherever possible using cleansed data from the centralised source.
An effective governance policy, rather than a strategy of enforcing the use of centralised platforms, is the most effective means of binding regional and local functions into the overall reference data strategy, he suggested. “It is important to set consistent standards and policies centrally, and manage the regional and local functions to ensure they are delivered upon. From the service delivery perspective, the centralised services are hubbed STP solutions with group-wide coverage. On the regional/local side, we are providing services which will often be manual and could be highly customised. From the technology perspective, centrally we are implementing common enterprise-wide solutions, while locally they might be reusing data in existing platforms.” Depending on their level of maturity, there could be some functions that want to retain control of the data, but nevertheless understand the benefits of being under the governance, he said.
There is a further balance to be struck between “business as usual” and strategic aims, Goldfinch warned. “Conflicting agendas will always be a problem for a programme of this size. You have got to bring the stakeholders together and make them do some of the work. You also need to manage the challenges of both running the bank, and strategic goals: with any programme you will have existing customers to service, alongside developing strategic ambitions.” At this stage of the ABN Amro initiative “demand is my biggest problem”, he added. “The more successes you have, the more people you bring in, then the more demand you have. You will see increasing demand the more services you offer.” The 100 per cent target he is aiming for today will have increased to 150 per cent in a relatively short time, he said, adding that the “most important point” to take away is “that this is an ongoing process”.