As numerous regulations come into force this year and financial firms pursue product innovation, client retention and cost reduction, the pressure is on to deliver data management programmes that can absorb change and meet both regulatory and business requirements.
The EDMworks Data Practitioner Network gathered recently to discuss the challenges and opportunities presented by regulatory enforcement and business change in a seminar entitled Regulatory Data Governance: Get Fit and Ready for 2014. The seminar was moderated by A-Team Group editor-in-chief Andrew Delaney. Speakers included PJ Di Giammarino, CEO at JWG Regulatory Research, and Dennis Slattery, CEO at EDMworks.
Di Giammarino headed up the event with a review of the regulatory agenda, G20 Regulatory Reform: A helicopter view. He described the 2014 regulatory agenda as bigger then ever before and warned of market upheaval as firms respond to over 300,000 pages of regulatory reform.
He explained: “An holistic perspective is needed to make sense of all the regulatory change and data professionals need to focus on the impact of the regulatory agenda. The data management challenge is about 7,000 pages a month, which means priorities are constantly shifting and there is no single view of what good looks like. But I think this could be an opportunity for data professionals. The need is to boil down what regulators want – first prevention of crime and transparency, second preservation of data security and systematic risk mitigation – align regulatory and management data requirements with regulatory data continents, and move towards holistic operating models.”
Di Giammarino noted AIFMD, Fatca, EMIR, Solvency II, MiFID II, Dodd-Frank and Financial Transaction Tax as some of the regulations that are moving forward quickly and must be tackled this year, and suggested the non-proprietary nature of a lot of regulatory data could create a case for shared services or, perhaps, data utilities. Arguing the case against doing the same thing again and again as more regulations are introduced, he concluded that it is possible to align processes across regulations and develop a target operating model to support regulatory and business data requirements.
Slattery followed Di Giammarino and presented Data and Governance, detailing business and regulatory changes, and describing how these changes can be supported by enterprise data management and governance. He suggested that by 2016 or 2017 financial firms will be offering upgraded product sets, be regulatory compliant, carry less operational risk and run at lower cost and higher efficiency. But he questioned how this could be achieved and considered whether change would be made through change programmes or as part of business as usual.
To achieve the changes required over the next few years he discussed functional management and governance issues that need to be addressed in a mature management model, including current systems, knowledge of business change, architecture and a target operating model, execution, and oversight and control. In a less mature model, he noted the need for similar activity but at a data management rather than functional management level.
Slattery emphasised the need to understand the business impact of data in any change programme and argued that balanced accountability and authority is essential to both functional and data focused programme management to ensure it delivers transparent and integrated plans, budgets, architecture and a target operating model.
In terms of governance, he suggested a single business could create its own data plans, data architecture, management and operations, and policies and guidelines using existing structures wherever possible. A more complex business would be more likely to need a chief data officer, either in a quality assurance role including the creation of data policies, quality measures and verification, or in an execution role including ownership of the data, vendor relationships and data management processes. Slattery concluded: “There is always risk, but you can reduce it by developing capable people and a rational governance framework they can work within.”