Regulation is driving many data management projects in financial firms, but when tactical projects morph into strategic approaches to enterprise data the requirements of senior management for enterprise and risk analysis can begin to be fulfilled.
Leading a panel discussion entitled Reporting for the C-Suite: Data Management for Enterprise and Risk Analytics at A-Team Group’s Data Management Summit, Andrew Delaney, editor-in-chief at A-Team Group, questioned the extent of management demand for analytics and how data managers are meeting the demand.
Robert Hofstetter, director and head of securities markets, data and control at Bank J. Safra Sarasin, explained: “Regulation is putting pressure on banks and management is demanding more analytics, but it never seems to believe the reports it receives. We make monthly and intra-day reports to the executive board, but we have a problem because we are not sure what to do when regulators only give us headline information and we must implement compliance in existing processes. The board doesn’t want to make a mistake, but it is difficult to get everything right and it won’t get easier. Just keeping up with regulatory reporting is hard enough.”
Peter Hughes, managing director at consultancy InterGroup (UK), agreed that the outcome of the financial crisis has been a tidal wave of regulation that is becoming more complex and difficult to manage. He also noted growing management interest in regulation and risk, saying: “Chief executives worry about unexpected losses. They question how risk builds up without being identified or quantified. This is no longer an accounting issue, but an issue for risk managers who need data and models to determine any losses.”
Acknowledging the challenges of regulatory reporting and meeting management demand for data analytics, Delaney asked the panel how data managers are coping and whether chief data officers (CDOs) are coming into play. Brian Sentance, CEO of analytics and data management provider Xenomorph, said: “We are seeing an emphasis on derived data. Data managers are trying to get complex data out of spreadsheets and into data management environments so that they can provide business analytics and improved granularity for regulatory purposes.”
On the subject of CDOs, Dennis Slattery, chief executive and data architect at data specialist EDMWorks, commented: “Management is responding to the need for better data governance and processes by putting more CDOs n place, but whether they have the teeth to tdo the job is questionable. For example, can they migrate many data silos into a few data warehouses? I see tactical approaches to particular business problems rather than work on the big picture.”
Hughes suggested the need to build new regulatory frameworks that balance simplicity and comparability opens opportunities for data managers, but said the potential of CDOs has yet to be recognised. Hofstetter was less upbeat, saying: “Many institutions have established CDOs, but all too often the CDOs have little chance to get started and leave the job because they are not empowered with budget or the ability to implement change management processes.”
In terms of tools and systems needed for reporting, Hofstetter said he is limited to one data provider for the bank’s systems and has started to scrub data from the provider as well as data from other sources that do not feed into the system in an attempt to establish the difference between data from different vendors. But he added: “We still don’t know which data is correct.”
Sentance said customers were using Xenomorph tools for data cleansing and to manage complex workflows, while Slattery suggested a need for data inventory type architectures and tools that could solve the problem of knowing where data is and allow data managers to formulate a picture of data and move forward from there.
Taking a final question from the audience asking what a CDO might be doing in 18 months’ time, Slattery concluded: “I would expect the CDO to be setting targets for change over the next five years, but managing change will be a major challenge.”