The EDM Council released on November 18, 2015 the results of its comprehensive benchmarking study on the state of data management across the global financial industry. What is encouraging to see is that financial Institutions are making progress on implementing data management program to reach the DCAM objectives. This progress is mainly associated with regulatory mandates, as 171 of 234 institutions (73%) named BCBS 239 as the key driver for their data management programs.
Efforts within these programs have tended to focus on:
- defining an initial strategy and plans for data management,
- establishing data policies,
- defining data governance roles & responsibilities,
- defining information domains & critical data elements,
- and expanding business glossaries.
The EDM Council Benchmarking Report also highlights that much more needs to be done to unlock and demonstrate the value of a comprehensive data management program to the business – beyond regulatory compliance.
While financial institutions focused their data management programs on the development of data management strategies and the foundations of data governance, the lack of data quality measurement indicates that we are still missing measurable results of formal data management programs.
Data Quality received the lowest score (2.83) followed by Data Architecture (3.04).
Not understanding your data (alignment of elements to meaning, criticality of data elements, logical data domains and data lineage) makes it impossible to steer the data management program into the direction that the business requires.
Similarly, not knowing the current state of your data and not having defined processes for issue management and remediation limits the program’s ability to identify and tackle root causes driving bad business performance or missed opportunities.
“Data quality programs need to go beyond standard exceptions monitoring and remediation to a point where real business value is contributed to the enterprise. You simply can’t manage what you don’t measure” explains Methea Tep, Partner with Element22.
Across the financial industry, the formalization of data management and the data office is mainly driven by financial regulation and not because of expectations of business value.
“According to the report, 83% of all 243 firms launched their formal data management programs in the last 3 years. So what will happen when the push of regulations like BCBS 239 subside? Will data management programs be cut back?” challenges Edward Hawthorne, Partner with Element22 and continues “Chief Data Officers have an opportunity to leverage current regulatory initiatives to advance holistic data quality programs, better manage the lineage and complex flows of critical data, and establish data management practices that demonstrate business value”.
Therefore, in addition to defining the data management strategy and formalizing data governance, financial institutions should increasingly focus on the following activities to establish a data management program that focuses on adding business value:
- measure the data management program,
- develop a full understanding of the meaning and content of enterprise data
- establish end-to-end lineage,
- implement standardized and contextual data quality approaches (measurement and issue remediation),
- make the data management program business outcome driven,
- and most importantly, enable new business opportunities based on data.
These initiatives must be the top priorities for any data management program in 2016 in order to establish a sustainable data management program that goes beyond regulatory compliance to add real business value in the long term.
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The opinions expressed are as of December 2015 and may change as subsequent conditions vary