As financial institutions battle escalating data management requirements and growing regulatory pressures, the appointment of a chief data officer (CDO) looks increasingly attractive to handle the workload, ensure strong data governance and play into the business strategy. At A-Team Group’s Data Management Summit in New York last week, A-Team Group editor Sarah Underwood was joined by panellists from Raymond James, Nomura and Northern Trust to tackle questions about the primary role of the CDO and the business drivers behind hiring such a person.
Chris Vickery, managing director and chief operating officer/Americas, and global head of enterprise data management at Nomura, set the scene for the discussion, explaining how Nomura was assessing the various types of CDO that are working in the market before pushing through with its own appointment.
Kay Vicino, CDO at Northern Trust, expanded on this, noting that while some CDOs are risk oriented due to the regulatory pressures on firms, others are more focused on growth and profitability. She said: “The combination of both really makes for a powerful CDO in an organisation.” At Northern Trust, Vicino said the company was looking for somebody who could not only defensively minimise risk, but also get more business growth and revenue out of its data.
Jennifer Ippoliti, CDO at Raymond James, commented from her experience, saying that data is the lifeblood of financial institutions and touches just about everything, so confirming the scope of the data management function is crucial to running an effective CDO office. With a variety of needs across different organisations, she mentioned that while the position should be a strategic role, a strong operational component can sometimes overwhelm the strategic if the role is not clearly defined at the time of appointment. Vicino developed this point, explaining the need to leverage operations, focus on oversight when conducting enforcement, and not get bogged down in doing everything yourself.
Moving on to look at core functions of the CDO’s role, Vicino said analytics are a huge factor in understanding what drives an institution and it is important to align the CDO role with corporate goals. Each line of business needs to understand the role of the CDO when business heads are brought to the table and it needs to be clear to everybody how data analytics can drive business and help business meet its objectives.
Vickery concurred with the other panellists’ opinion that the CDO has a hybrid role and must increasingly make money on the operational side, rather than simply work on managing data. Ippoliti stressed the importance of focusing on data governance, while data analysts handle day-to-day practicalities. She said: “You have to have enough authority and resources to enforce what you govern, otherwise, you are in an ivory tower, writing rules that nobody complies with.”
Looking at specific motivations for the appointment of a CDO, Underwood asked the panellists why firms hire their first CDO. Ippoliti tackled this question with the example of Raymond James’s acquisition of Morgan Keegan. She explained how the need to break down silos of data and integrate the best from both firms drove the creation of her position.
The panel agreed that while there is increased pressure from regulators and greater interest in data as awareness of its value grows, data quality remains a problem. Vickery said the reasons behind this can be multiple, but noted that potential opportunities to reduce costs, by almost a third in some cases, mean integrating a more coherent data infrastructure and delivering higher quality data is increasingly desired.
Turning to cost savings, Vicino said that simply using information architecture technologies can take a zero of costs, bringing them down to something more palatable and easier to sell. The panel agreed that having a CDO makes it easier to win funding for data management projects, but as Ippoliti pointed out, this is often because there is a better environment for discussion and understanding if a firm has appointed a CDO. Business cases that demonstrate the damage that can be caused by regulatory fines and irate clients are central to winning support for data management projects, but Vicino noted the need to be cautious about ‘overplaying the regulation card’.
The panel ended with a quick question about what advice members would give to a firm looking to appoint a CDO. Ippoliti said the biggest issue is doing the homework and determining what the firm is looking for before appointing to the position. Vickery agreed and Vicino concluded that a firm should consider accountability and close tie-ins with overall strategy, and then supplement these with adequate authority, funding and support to get the most out of the role.