Finance Data Management & Governance Importance
Just like most industries, banking and finance have forever changed due to the explosion of big data and the infrastructure required for processing such data.
More and more financial institutions are finding themselves overwhelmed with mounting quantities of datasets and are simply unable to manage this critical asset at such a large scale. Because of this, these organizations are beginning to recognize the importance of incorporating Data Governance programs and finance data management. Data Governance sets the tone for the overall corporate mindset and culture by establishing enterprise-wide data norms as it pertains to documentation, data capturing, ownership, and access privileges.
Our experience has shown us that Data Governance is no longer a luxury. It has become a necessary discipline and an important area of focus for modern financial organizations to realize operational efficiency and to support business growth. We’ve spoken with many organizations that look to expensive technology to solve their Data Governance challenges. However, technology is only part of the solution and should be coupled with a real Data Governance strategy to support the investment. By embracing such an initiative, finance organizations are seeing improvements with automation and, customer satisfaction as well as fraud detection.
Another area where a Data Governance program can help finance organizations is with better decision-making. A lack of data management leads to unrealized opportunities and the inability to make informed and educated decisions. Data Governance gives organizations peace of mind knowing that, due to proper data modeling and oversight, their data is of the highest quality. This reassurance gives users confidence that the data being used for reporting and analysis is accurate and helps optimize decision-making.
Timely decision-making is especially important for brick & mortar financial institutes given the emergence of FinTech entities. According to Financial Technology Partners in Q1 of 2021, FinTech had its highest-grossing quarter to date with financial volume at $29.1 billion. This is a 153% year-over-year increase. FinTech’s ability to pull structured and unstructured data from both internal and external sources and quickly process that data allows them to provide accelerated utility services. By adopting a Data Governance program that provides guidelines on how to manage the data, banks can streamline decision-making and keep pace with FinTech competitors.
Another important benefit of implementing Data Governance deals with enhancing protocols and processes that address risk and fraud management. As we are all aware, the finance sector is a heavily regulated industry, and for good reason. A holistic Data Governance program that aligns with the organizational goals, as well as their compliance guidelines, will eliminate fragmentation. It also helps centralize data and set appropriate levels of ownership. Whenever data has been manipulated or deleted, it should always be reviewed by the owner before being committed in the system. These checks and balances maintain the data’s integrity and help highlight any risk exposure that can lead to heavy fines, reputational blemishes, and other penalties.
Also, having Data Governance controls in place allows for data stewards to effectively monitor security breaches. This would then mobilize a security “SWAT” team, so to speak, to neutralize the breach. Other capabilities include empowering users to analyze transaction data to reduce payment fraud. Additionally, it can support applications to receive notifications of any compliance changes both internally and from external regulators.
In summary, a Data Governance program and overall finance data management can be leveraged in the banking industry to produce positive operational and business outcomes. It also allows for better decision-making and enhanced fraud management. Because of this, Data Governance will be critical to supporting the continued growth of such organizations. Data Governance programs will lead to the development of a secure data foundation that future initiatives can build upon, only furthering their competitive advantage.
Written by Mike Sargo
Co-Founder & Chief Data and Analytics Officer at Data Ideology
Mike Sargo is Chief Data and Analytics Officer and Co-Founder of Data Ideology with over 18 years of experience leading, architecting, implementing, and delivering enterprise analytics, business intelligence, and enterprise data management solutions.