Data Governance: A Banking & Finance necessity, not a luxury

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 into their operation. 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, and timelier, decision making. A lack of data management leads to unrealized opportunities and the inability to make informed and educated decisions. However, the data principles set forth by a thoughtful Data Governance framework 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 with savings, loans, and trading just to name a few. 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 by helping to 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 which 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 as well as support applications to receive notifications of any compliance changes both internally and from external regulators.

In summary, a Data Governance program can be leveraged in the banking and finance industry to produce positive operational and business outcomes allowing for better and faster decision making and enhanced risk and fraud management. Because of this, Data Governance will be critical to supporting the continued growth of such organizations. Success of a Data Governance program will lead to the development of a secure data foundation that future initiatives can build upon, only furthering their competitive advantage.