How does governance minimise data complexity in the financial industry?
Most financial giants have been around for decades. Over the years, they have built up a complex array of systems, platforms and various other data sources which interconnect across multiple levels. These labyrinthine environments make it extremely difficult to understand what data they have, where it resides, and whether the data can be trusted.
With data being so dispersed and circuitous, using it effectively can be an onerous undertaking. Data is used for many reasons, from gaining better insights into customers and market trends, to improving customer experience, creating new or improved products/services and, of course, complying with regulations.
Making changes also becomes challenging if the impact of any change is not clearly evident or understood. A single change on one system could cause a chain reaction across other systems, affecting functionality and operations.
Adding to this complexity is the impact of regulation. Knowing where data resides, and its relevance and purpose to the organisation, are some of the requirements of the many regulations that financial institutions are obligated to comply with. These include the Financial Intelligence Centre Act (FICA), Know Your Customer (KYC), Basel Committee on Banking Supervision’s standard number 239 (BCBS 239), Protection of Personal Information (PoPI) Act, and General Data Protection Regulation (GDPR) – the latter being requirements even for South African banks who are likely to count any number of European citizens among their clients.
Although there is no single, one-size-fits-all approach, bank management teams can employ some underlying data governance principles and practices to more successfully collect, manage, protect, and deliver data throughout their organisations.
Data governance is vital for a business to sort through and understand what data it has, where it resides, create a strategy around it and carry it out successfully. One of the biggest challenges with data governance, though, is a lack of understanding around what it comprises. Many organisations confuse governance with the tactical tools and tasks it prescribes to manage data.
