Today’s economic environment has caused financial institutions to go back to basics and focus on the three Rs: risk, regulation and return on investment (ROI), explained Gert Raeves, senior vice president of strategic business development and marketing at GoldenSource, to attendees at the EDM vendor’s recent briefing on risk management. Raeves also discussed the findings of the vendor’s recently commissioned research, which was carried out by A-Team Group, into the area of risk management and its relationship with data management practices (see Reference Data Review next week for the full details).
The old world is dead and we are now on the precipice of innovation, Raeves explained to attendees. The recession and the bursting of the economic bubble have resulted in a retrenchment by the financial services industry and the days of enterprise technology innovation are over. There are no safe zones from the impact of the crisis and this is why risk management has become very important to the survival of these institutions, he said.
This focus on risk management is linked to data management and every data project is a change project, Raeves continued. “According to the results of the A-Team Group research, two thirds of all risk managers want to change the way they operate,” he explained. “This means that data processes must change.”
Raeves identified five conclusions that can be drawn from this requirement to change: “Data needs to be accessed quicker, sometimes this means in real time and this requires the data sets to be properly integrated. There needs to be more depth with regards to data, down to a granular level but this data also needs to be aggregated for risk reporting requirements. This means that there must be support for different types of measurement of risk and the data can be sliced and diced as needed.”
He also made reference to the recent KPMG report on risk management and explained that what was clear from the report is that risk management professionals want “incentives, governance and a change in corporate culture”.
Raeves asked data management professionals to be honest with themselves and accept that although things may be difficult, they are not impossible. “There are hard numbers out there to help you prove ROI,” he said. “This is not just aspirational and you don’t need to ask senior management to believe in fairytales.”
A common theme throughout his presentation was the benefits of “mashups” or “remixes” with regards to data. He referred to consumer data offerings such as Google’s semantic data network and Powerset as examples of remixing that the financial services industry should take heed of. “Online has changed the world and this new generation of users want data to be free and open,” he continued.
“Remixing is nothing but dealing with golden copy,” Raeves explained. “Financial institutions must embrace the logic of remixing data but they must also fear it. In order to prevent misuse and fraud, there must be a sufficiently robust infrastructure in place.”