To inform the agenda for our upcoming Chief Data Officer Forum, Financial Services event, I have spoken with more than 50 Chief Data Officers (CDOs) and other senior data practitioners working in leading financial services organisations over the last two months.
This has given me a fascinating insight into the health of the data space within financial services. So, how are we doing; are we prepared for the marathon ahead, or floundering at the first hurdle?
Putting on my stethoscope, I diagnose that;
Financial Services CDOs are getting to grips with their heart…
We all know that financial services firms were amongst the earliest adopters of the CDO role. This reflects not only the natural instincts of the industry to be ahead of the curve, but also the heavily-regulated environment in which we operate. This burden is understandable; as one CDO put it to me “What’s the worse that Facebook can do? Give me a bad like? If we mess up merging two accounts then that causes huge problems!”.
However, heavy regulation means that unlike many other sectors, financial Institutions face huge regulatory risk and so ensuring our data is fit-for-purpose to demonstrate compliance is vital. This necessity of high quality information drove the finance world to appoint CDOs responsible for ensuring that they would not enter ‘cardiac arrest’ with bad data leading to fines and reputational damage. Therefore, like a heart, financial services CDOs must ensure that the lifeblood of good quality data remains pumping around the body.
From my research, it is clear that the industry is making progress towards a healthy heart, by raising the standards of Data Quality through better governance, as well as improving and simplifying compliance with regulations. This is not to say that there is not still work to be done here, rather that we have started down the path by improving our diet, taking up jogging and hiring a personal trainer. It will still take time and effort to achieve the end results we strive for, and of course we are all at different points on that journey, but the methods to pursuing success are becoming more clearly defined in this area, with the CDO from one of the ten biggest US banks identifying four different approaches commonly being used.
From my research, it is clear that the industry is making progress towards a healthy heart, by raising the standards of Data Quality through better governance, as well as improving and simplifying compliance with regulations
… But we need to get better at using our head!
The biggest factor in the success of humans as a species is our brain power. This allows us to gather, assess and utilise all of the information available to us, and then use it to make the best possible decisions. Similarly, financial institutions need to be able to make business decisions based on what their information is telling them. To be successful and remain competitive in the new data-centric world, companies must be able to use their data as an asset, to guide them to operational efficiencies, increased revenues, and ultimately greater profitability.
So far in the story of CDOs in financial services, the focus on improving our heart’s health (defensive measures) has meant that developing our brain power (offensive measures) has been lower down our list of priorities. This is understandable given the initial driver of CDO appointments was regulatory. However, for CDOs to cement their position in the C-suite, they must move beyond this and begin to deliver real business value. In my recent conversations there is some evidence of this beginning to happen with a CDO discussing their examination of how real-time analytics might lead marketing efforts away from customer profile segmentation and towards reacting to transactions as they happen, for example a customer being offered travel insurance products after purchasing skies. This is encouraging, but is limited to a select few companies, as well as in scope. Financial services are lacking behind other industries in this vital area, and must begin to prioritise it if we are to keep up.
So far in the story of CDOs in financial services, the focus on improving our heart’s health (defensive measures) has meant that developing our brain power (offensive measures) has been lower down our list of priorities.
Some might argue that, in this case, you have to put your ‘heart’ before your ‘head’ as quality data must provide the foundation for the value-add initiatives that follow. Whilst there may be some truth in this, Data Quality will never be perfect, and at some point financial service CDOs will need to focus on deriving business value from their data. Maybe now is the time to make the leap from ‘heart’ to ‘head’ - before your competitors do!
Attend our Chief Data Officer Forum, Financial Services, June 21 – 23, to discover ways to move beyond regulatory compliance and start delivering business value from data at your company. Hear from industry leading CDOs on the biggest topics of the day, including this and many more.
By James Bowater:
James Bowater is Content Director US/Europe for the CDO Forum. James is currently producing our first sector specific events, organizing both CDO Forum, Financial Services, and CDO Forum, Government. By consulting senior data leaders in both fields, he will facilitate industry discussion and debate to address the biggest challenges and opportunities currently faced by the field. Both events launch in June 2016, on US East Coast. For enquiries email: james.bowater@coriniumintelligence.com
