The IBM Data Governance Council, which was set up three years ago by IBM and comprises 50 financial market firms, is currently discussing establishing best practices for the industry on how to manage critical financial data.
The council plans to build what it calls an “information governance framework”, which will be based on their existing data governance maturity model. This essentially means that it will provide the industry with guidance on how to execute data governance at a granular level with defined roles, tasks, activities and a broad set of data governance procedures to make data governance a part of business operations.
Steve Adler, chairman of the council, explains: “Upcoming work by the council will help organisations better understand governance, how it will benefit the bottom line and be reported to the markets, as well as the desired end result for each business. This is an important contribution the Data Governance Council can make in the marketplace and we invite others to participate as we build standards that define the next level of maturity for this important discipline.”
The group is focused on improving the accuracy and visibility of data including client information and financial positions via better data governance. According to the IBM-led council, data will soon be treated as a key performance indicator (KPI). It will also be treated as an asset on the balance sheet and reported by the chief financial officer, while the quality of data will become a technical reporting metric and IT KPI.
“Data governance today is at a crossroads, creating the opportunity for a marked change over the next four years as data quality evolves into a key performance indicator for businesses worldwide,” the group explains in a statement.
Richard Livesley, head of information governance and quality at BMO Financial Group, which is a member of the council, explains: “There is no one size fits all approach to data governance. Every company must configure their own data governance programme based on their individual needs. Likewise, there are different levels of data governance maturity and different ways of attaining it. In just a few years, data governance will become a key benchmark as boards of directors recognise their fiduciary responsibility to enhance and protect data, and markets measure business performance by looking at data value and risk on the balance sheet.”
It is likely that in the next four years regulators will require institutions to demonstrate sound data practices as part of regular data audits, the group says. As a result, new accounting and reporting practices will emerge for measuring and assessing the value of data to help organisations demonstrate how data quality fuels business performance.
Risk calculation practices will become more automated and this will, in turn, provide greater transparency to the market. The role of chief information officer will change over time, so this position is responsible for reporting data quality and risk to the board, the group contends.
Furthermore, new categories of operational software will emerge that demonstrate common data governance problems and allow employees to self- govern, sponsor and vote on new policies, provide feedback on existing ones and participate in dynamic data governance.
Members of the council include Deutsche Bank, Merrill Lynch, American Express, Bank of America, Bank of Tokyo-Mitsubishi UFJ, Bank of Montreal, Bell Canada, BMO Financial Group, Citibank, Discover Financial, Kasikornbank, MasterCard, Nordea Bank, Wachovia, Washington Mutual and the World Bank.