The issue of data management is so important in the current market that it has been raised as a priority at the board level, according to a recent report conducted by Amber Group and commissioned by data integration consulting firm Evaxyx. The focus on improving risk analysis and reporting systems has meant that data management is finally in the spotlight, says Simon Slocombe, principal consultant at Evaxyx.
The report was commissioned by Evaxyx to understand the impact of the financial crisis on financial institutions and involved 10 in-depth interviews with strategic data managers from UK-based firms including Invesco, Northern Trust, HSBC, HBOS and State Street.
Slocombe elaborates on what he believes to have resulted from the financial crisis: “A clear result is that data management experts are now taking their rightful place at the planning and decision making table. In the past, they were often left out of early strategic and planning discussions around new processes and systems. And if they were at the table, their opinions and concerns were often dismissed by the business heads. However, there was a clear belief from those interviewed that this attitude had changed as a result of the financial crisis.”
He believes that data management experts are now being called in at the strategic planning stage around process and system changes. “Their advice is being heeded and they are playing an integral role in the programmes,” adds Slocombe. This is largely due to the threat of regulation, which has given senior managers “more levers to out pressure on teams to make changes”, according to the report.
Data managers are engaging in “data management improvement by stealth”, says the report. This involves linking regulatory and compliance demands with specific “bite sized” data management projects in order to get them green lit. This is therefore laying the foundations for future data management evolution, claims the report.
Despite this progress, there are still some significant cultural barriers remaining in the area of data management, says the Evaxyx report. This is the case with regards to the lack of a single source of data and the persistence of silos of information within firms. The report attributes this lack of progress, to some extent, to managers looking to protect and maintain their proprietary systems and empires.
There is no “wholesale” change, adds the report, and data management projects are not automatically being given the green light. There is rather a cautious approach to data management being adopted and this is focused on risk evaluation and accurate valuations, it contends. The reason for this cautious approach is: “Management cracking down on expenditure to assist in reviving profitability. In addition, management understands that they will have to make significant additional investments to meet the new regulatory requirements and it is not yet clear exactly what these demands will be.”
However, respondents indicated that they are concerned that unless fundamental steps are taken to clean up their systems, old habits and familiar problems will return when the market returns to profit, says the report.
Slocombe agrees that these steps currently being taken by the market do not go far enough. As a result of the research, Evaxyx is therefore calling on the UK Financial Services Authority (FSA) to insist all financial institutions establish a central strategic data governance fund to help protect against future crisis. The fund would be used by each financial institution to clean up its information systems, ensuring every organisation had one source of data and a single customer view, says the firm.
“It is critical that the culture of the all powerful business heads and proprietary data systems are crushed once and for all,” contends Slocombe. “One practical step that financial institutions could take at a stroke is to shave 3% off of the annual budgets of each business line and place this funding into a strategic data governance fund within the organisation. This fund could then be used to continuously improve the systems and processes within the organisation around data integrity and governance, ensuring the market’s financial institutions become role models for data governance best practice in years to come.”
The report concludes with five key recommendations for data managers: get involved with data strategy; use risk and regulation to push through change; focus on bite sized projects; eliminate silos; and encourage a data culture within firms.