The Bank of England is pressing ahead with plans to deliver data standards for data collection based on its vision that ‘the bank gets the data it needs to fulfil its mission, at the lowest possible cost to industry’. It acknowledges the challenges of setting standards, such as coordinating collective action, and says it will use ‘its powers to help overcome key barriers to delivering reforms that may prevent adoption of data standards’.
In its Q1 2021 quarterly bulletin, Delivering data standards and transforming data collection in financial services, the bank notes that it has ben working with the FCA and industry to explore ways to improve data collection since 2016, and now finds ‘new demands for data are straining processes and systems used to collect data’.
After an initial focus on greater use of technology to improve data collection, the bank says it soon became clear that more fundamental changes were needed in terms of how data is defined and managed, which has led to the need to develop and adopt common data standards that consistently describe and identify data within firms.
The April bulletin is linked to the bank’s Transformation Plan – Transforming data collection from the UK financial sector: a plan for 2021 and beyond, that was published in February 2021 and sets out the bank’s commitment to:
- Delivering common data standards
- Setting up a joint transformation programme with industry and the FCA
- Using its powers to help overcome key barriers to delivering reforms that may prevent adoption of data standards.
During a recent webinar hosted by the EDM Council, Gareth Ramsay, executive director, data and analytics, and chief data officer at the Bank of England, said: “At the heart of the plan is our aspiration that the bank gets the data it needs to fulfil its mission, at the lowest possible cost to industry. And we know that what data we need will change over time . . . We need a reporting framework that can adapt to new demands as smoothly, quickly and efficiently as possible.”
He continued: “We have identified three long-term reforms that we think can transform our data collections, and also bring wider benefits . . . The first reform is to improve how we write our reporting instructions . . . The second reform is integrating various reporting processes . . . But third and most foundational is the wider development of common data standards. This underpins the other two reforms. And we believe it can help firms and other users make the best use of data, well beyond our collection processes.”
During the first two years of the transformation plan, the bank intends to deliver three data standards use cases. An early use case has been identified in commercial real estate (CRE) lending, a key contributor to the 2008 financial crisis with a tradition of negotiated paper contracts and a lack of automation that makes it difficult to access good quality data. The problem is being addressed by industry participants working on a central utility for accessing granular CRE data using data standards that identify and label data such as the loan amount or the loan’s arrangement fees.
The bank has yet to disclose further use cases and is calling on industry to take the lead in developing data standards. Ramsay concluded: “Rolling out data standards needs to be an industry-led process, with the authorities playing a supporting role. This is data that industry generates, and industry uses. It is processed in firms’ systems long before it comes anywhere near us. Industry needs to lead.”