How to Manage Data Risk and Stay Compliant in a Fast-changing Environment
Now more than ever, the issue of data governance is front and centre for financial services. It’s been heading that way for a while — back in March, EY’s global bank risk management survey revealed data quality, privacy and security, and threats of cyber attack were the top concerns for leaders in international finance.
There’s more and more data all the time, and it can be hard for banks to keep up and make sense of the data. It’s more risk but it can also mean more opportunity if handled correctly. And alongside the risk, important conversations are being had about the need for regulations — both internal and external. Which places more pressure on financial services institutions to keep up. It’s a delicate dance — with an unfamiliar partner, because it’s new territory.
So what are the key things to consider when it comes to data risk and governance, and how can we stay ahead?
How can financial services institutions manage data to minimise risk and ensure compliance?
1. Supporting data integrity
There’s a well-known saying: you get out what you put in. When you’re collecting data, it needs to be clean and stored correctly. Otherwise, you can end up with data that lacks integrity.
The challenge is when you’ve got multiple repositories of information, both static and in flight. That information is structured for the purposes of its use, but you need to bring that information together — consolidate it, normalise it and remove duplicates — and provide a useful semantic layer. Of course, you want it to be reliable, accurate and available so that when it comes time to do reporting, you’re not spending a week out of every four weeks getting the numbers together (which is what we see many banks doing).
The risk is that the information is always going to be out of date, take too many man hours to retrieve and there is a lack of confidence in it being clean. And that’s especially important with the increasing demands from regulatory bodies for more reporting, done sooner and within a harder regulatory framework.
So financial Institutions need to ensure they have the right systems in place to be able to process, analyse and report on data. With InterSystem’s IRIS data platform, business always have access to data that is accurate and current. Users have self-service analytics capabilities to visualise, analyse, and interrogate live data and get the information they need in order to make timely and accurate business decisions. Data can also be fed to regulatory bodies in real-time. You’re integrating it into a way of doing business, and you cut out the labour-intensive reporting cycle.
2. Internal governance
Technical systems alone aren’t enough to minimise risks relating to data. Financial institutions need to have suitable internal governance policies in place. Because the key thing to remember with data — particularly when AI capabilities are growing faster than we can keep up with — is that there’s always a question of ethics. Sure, you can do exciting things with data — but should you? Customers should own their data and choose to give it to companies so they can provide a better service to them. When you’re using more of your customer’s information, you’ve got to have the right governance regime — to make sure you’re doing right by them.
Financial institutions are on an interesting journey to rebuild trust. Banks leveraging data to provide a better service is part of that journey. It’s important to demonstrate that they’re using data for good rather than simply trying to make more money, and good governance is the cornerstone of that.
UOB are an example of a bank that’s trying to move the industry forward with their approach to governance. Acknowledging that there are lessons to be learnt and shared about real-world data, they’ve established a multi-disciplinary data ethics task force to develop a governing framework, policies and processes that ensure the Bank uses data in a responsible and ethical manner.
3. External governance
While it’s important for businesses to take responsibility for their own data, it’s also important to look at the bigger picture and expect some consistency across the industry. This is where government associations play their part. And organisations have the opportunity show their commitment to best practice.
The Veritas Consortium is a good example of how industries and regulators can partner to look at the ethics, make sure organisations are doing the right thing and help regulation catch up to technology. Participating member Group Chief Data Officer of UOB Richard Lowe says: “Doing right by customers through the ethical use of data is the responsible and sustainable way to do business.”
Moving forward, providing seamless review cycles between financial institutions and governance associations is paramount. And critical to that happening is making the reporting process easier for financial institutions to adopt. Having reporting capabilities built into data platforms from the ground up, means that reporting into governance associations can be automated and in real-time. The real-time feed allows governance associations to improve their own regulations and processes and move ahead of the data capability curve.
Intersystems are experienced partners helping financial institutions make reporting processes easier through effective data governance. Reach out to discuss how we can help you.
Author Bio: Peter O’Halloran
Peter O’Halloran is a Sales Engineer at InterSystems. He is an expert in all aspects of information- including the capture, storage, retrieval and analytics. With more than 20 years of experience in engineering technology, Peter handles the InterSystems IRIS suite of products. Please click here to follow Peter on LinkedIn.
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This story is published by InterSystems. We write about Database Technology, Advanced Analytics, Machine Learning and Artificial Intelligence.
