Data must be consistent, accurate and interoperable to ensure financial institutions can use it in their investment, risk, regulatory compliance and other processes. Without those attributes, they won’t achieve the efficiencies, surface the insights, action decisions or realise the many other benefits of digitalisation.
Identifiers and standards ensure those attributes can be met. The challenge facing institutions, however, is that such rules often conflict or don’t exist. At the most fundamental level, for instance, company names may not be identically represented across datasets, meaning any analytics or other process that incudes that data could be skewed.
When identifiers and standards do align, however, they offer value beyond the advantages that come with clear categorisation. These benefits will form an important part of the conversation in A-Team Group Data Management Insight’s next webinar, entitled “How to Maximise the use of Data Standards and Identifiers Beyond Compliance and in the Interests of the Business”.Industry Leaders
The webinar will see leading figures from the sector delve into the importance of identifiers and standards as well as provide context about their uses and benefits. On the panel will be: Alexandre Kech, chief executive of the Global Legal Entity Identifier Foundation (GLEIF); Robert Muller, director and senior group manager, technology product owner, at BNY; Emma Kalliomaki, managing director at Derivatives Service Bureau (DSB); and, Laura Stanley, director of entity data and symbology at LSEG.
“Identifiers and standards play a critical role in data management,” GLEIF’s Kech tells DMI. “They facilitate clear identification and categorisation of data, enabling efficient data integration, sharing, and analysis.
Without them financial institutions, corporates and other legal entities, would struggle with several challenges, he said.
Among those pain points are data inconsistency resulting from different systems using different naming conventions, which would lead to difficulties in data reconciliation and integration, and operational inefficiencies, with manual processes being used to verify and match data increasing the risk of errors and operational costs.
Additionally, Kech said, compliance risks that stem from fragmented and inconsistent data would prevent regulatory requirements to be met effectively; and, limited transparency would make tracing transactions and entities accurately difficult, potentially hindering risk management and auditing processes.
In essence, this would erode trust and reliability in the data, said DSB’s Kalliomaki.
“That is fundamental for firms to fulfil a lot of functions, but regulatory reporting is one that comes with great consequences if not undertaken properly,” she tells DMI.
“When it comes to having data standards, everyone is very aware that to better manage your data, to better assure the quality of your data, to ensure consistency alignment harmonisation with your counterparties and to mitigate the number of omissions and errors you may have, having standards is much more effective from a data management standpoint.”
Growing Need
“The amount of data that financial services firms are engaging with in their financial instrument processes is growing exponentially. Therefore, the need for data standards and identifiers is growing alongside this,” said Stanley at LSEG, which supports a number of identifiers, enabling delivery of a firm’s existing and evolving use cases.
LSEG issues proprietary identifiers such as SEDOL and RIC and acts as an National Numbering Agency for UK ISIN codes, is a globally accredited Local Operating Unit for LEI codes and recognises the importance of standards across the ecosystem and beyond regulation.
“At LSEG we acknowledge the potential of data when shared, the PermID is fully open and acts as the connective tissue that enables us to identify different objects of information and stitch data sets together.”
More Than Compliance
With robust identifiers and standards in place, the full value of data can be extracted. Among the benefits expected to be discussed in the webinar are:
- Improved decision-making and analysis
- Lower costs from reducing the need for manual data processing and reconciliation and from accelerating transaction processing
- Innovation driven by seamless data exchange between different systems and organisations
- Enhanced business agility and competitiveness that comes from providing reliable data for strategic planning and risk management.
“I see financial institutions using data standards and identifiers – beyond compliance – to a great extent,” says BNY’s Muller. “There are a number of best practices firms can employ, for instance strategy, design and education, to ensure standards and identifiers deliver value through associated business cases.”
With regulatory demands likely to increase over time the need for common identifiers and standards is expected to grow in importance and lead to harmonisation across borders.
“As a broader community, we all have to be willing to look at the greater good rather than commercialisation or IP-related aspects,” says Kalliomaki. “That harmonisation of us working together collaboratively is key.”
- A-Team Group’s How to Maximise the use of Data Standards and Identifiers Beyond Compliance and in the Interests of the Business webinar will be held on July 18 at 10am ET / 3pm BST / 4pm CET. Click here to join the discussion.
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