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Creating a Data First Mindset in the Capital Markets Sector

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By: Clive Bellmore, CEO Europe and Africa, BackOffice Associates

Analogies about how vital data is to the digital economy are bountiful. It has even been branded ‘the new gold’, a critical and precious asset that directly impacts business outcomes for companies across the globe and in all sectors. And never more so than in the capital markets sector.

Electronic trading alone generates millions of messages every day. In addition, volumes of transactional data are rapidly growing in response to increasing numbers of transactions. The bulk of this data is scattered across various departments, geographies and systems – with the quality often varying.

Putting data in the hands of employees across a company can be a powerful thing, but ensuring that it’s refined and clean can be a complete game-changer. As well as being the base for operational, risk management and trading decisions, data is intrinsic to the reporting requirements capital market companies have for clients and regulatory bodies. Given the advent of MiFID II and PRIIPS, reporting regulations have increased significantly.

Recent research from State Street Corporation shows the majority (88%) of asset managers see data requirements as a challenge to their distribution strategies, while more than a third (36%) agree that MiFID II will make cross-border activity more difficult.

Poor data quality is a potential risk for senior executives and business leaders alike. Not only can it have a potential impact on business performance, but within the capital markets sector dirty data – for example, inaccurate, incomplete or inconsistent data – could expose CEOs and chief financial officer to regulatory disclosure risk. Despite this, there is still a large number of companies that seem unable to properly refine their data, and aren’t giving data the respect it deserves.

This needs to change. What is lacking in the sector is a data-first mindset. Once instilled within an organisation, it can ensure that not only is the data refined to the best possible quality, but that it retains its commercial value while adhering to regulatory requirements.

So how can this be done?

Creating, or changing, a mindset can be daunting. Even when it’s done for both regulatory and revenue reasons. For it to be a success, it needs to be reinforced and accepted by everyone in the company, starting from the top down.

It may cause an eye-roll or two, but education needs to be the starting point. Often this lies firmly at the feet of the chief financial officer or chief data officer, but given the fact the chief marketing officer is using data on a daily basis, it needs to be a team effort. Everyone needs to play their part. Together they need to clearly communicate the breadth of risks that poor data quality creates to the entire organisation.

Once you’ve educated the organisation on the importance of data and why each team should care, another way to reinforce and establish change is to appoint a ‘data advocate’ within each team. This must be someone who is willing and able to push the needle and help reinforce the message and cultural change.

Having buy-in from the board should also help to release the budgets needed to develop, implement and maintain ongoing and consistent data governance strategies and best practices. In order for these to work and be accepted, it is vital realistic time frames are put in place. Contingency plans also need to be in place for team members who may be pulled away from their data duties when any extraordinary demands from the business occur. This will also ensure the whole business sees the importance that is being placed on data.

Finally, and perhaps most importantly, is the need to implement technology that can help take on some of the heavy lifting. Data quality management services are often highly flexible and can be customised to meet the specific needs of a company. Alongside providing best practices in data quality and the correct process to remediate data errors and securing data, the ability to minimise the need for internal organisation staffing is precious. Especially when it comes to developing and maintaining a data-first mindset throughout a business, it helps to take the perceived burden off already stretched teams and their resources.

Making data central to any capital markets business is essential. Once it becomes the core of the company culture, it can be intrinsic in unlocking valuable revenue opportunities, and help keep the regulatory wolves from the door.

It’s also a lot easier and less painful than many companies may think. With a solid and fully supported education campaign, feasible data governance strategies, best practices and the right technology, developing a data-mindset should be a walk in the park. Companies within the sector need to get working on putting this in practice and cannot rest on their laurels, the risks are simply not worth it.

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