Integrated data overlays are offering mid-tier banks the opportunity to transform their data infrastructures without having to undergo disruptive and potentially expensive replacement projects.
By creating a dynamic enterprise-wide data layer, organisations are able to knit together their data, no matter how fragmented, in real time and deliver a single source of truth for business users, according to a new white paper by InterSystems and published by A-Team Group.
The strategy is a cost-effective one that gives banks the technological firepower to solve recurring pain points while also providing the foundations that future-proof them to adopt new innovations as they emerge.
“To address these friction points without embarking on risky, multi-year rip-and-replace initiatives, institutions require an integrated, non-disruptive, real-time data management platform,” according to the report, entitled “The Integrated Data Overlay Approach to Solving Banks’ Data Challenges”.
“This platform acts as an overlay, unifying disparate data sources, automating workflows, enforcing rigorous governance and delivering a reliable foundation for business analytics, risk modelling and regulatory compliance.”
Pain Points
Banks are being expected to upgrade their digital provisions as they increasingly adopt multi-asset investment theses amid global economic uncertainty and as customers demand new levels of personalisation.
Unfortunately, many are subject to structural challenges that make it difficult for them to adopt the necessary technologies, including artificial intelligence and agentic automation.
According to the white paper, among the pain points that an integrated data overlay can alleviate are:
- Poor Data Quality, Inconsistency and Duplication – good quality data is critical to the optimal running of systems and applications but organisations too often have a surfeit of it
- Rising Costs of Managing Diverse Data – the expansion and increased complexity of datasets needed by banks have put a heavy toll on banks’ resources
- Fragmented Data Sources and Legacy Systems – datasets locked in separate silos are difficult to manage and to distribute to business users
- Lack of a Single Source of Truth – the outcome of fragmented datasets is the difficulty in creating a single source of truth from which the enterprise can seamlessly work without the need for manual processing
Compliance Pressure
The white paper explains that banks are also facing mounting external pressures, especially from regulators, that a data overlay can help them solve.
“Regulatory bodies have intensified scrutiny of data integrity, timeliness and lineage, turning data management into a core regulatory concern rather than just a back-office technical function,” the report stated.
In the US, supervisory expectations are rising with greater levels of compliance expected in measures such as the Office of the Comptroller of the Currency’s (OCC) Heightened Standards (12 CFR 30, Appendix D). Globally, the Basel Committee on Banking Supervision’s standard for risk data aggregation and reporting (BCBS 239) expects institutions to aggregate and report risk exposures quickly and accurately during stress conditions.
Changes to regulatory audits have seen banks review their data governance and lineage provisions as full end-to-end tracing becomes compulsory. And reporting requirements have toughened as market volatility and rapid electronic clearing have required a shift from end-of-day batch processing to intraday liquidity management.
The future-proofing of systems has placed an emphasis on AI-readiness that has, in turn, placed added focus on improving data quality.
Data overlays are already providing the foundations that are enabling mid-tier banks to meet these challenges, the report stated, citing InterSystems’ own data management and analytics services.
To deliver this overlay architecture, financial institutions require a partner that can unify complex data environments without expensive, disruptive replacements,” it stated. “InterSystems offers capabilities that banks need to modernise data operations, such as data integration, governance, workflow orchestration, interoperability and AI readiness, within a unified platform.”
- Download your copy of the white paper, The Integrated Data Overlay Approach to Solving Banks’ Data Challenges, here.
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