Financial Institutions and Regulations Part 1: The Journey to Enterprise Data Governance.
Current conditions make it necessary to implement metadata management within financial institutions. Having automated data management systems is integral to efficient and trustworthy governance in any firm from retail banks all the way to insurers. Leveraging metadata tools can at once reduce risk overheads and increase the efficiency of any trust, analytics or reporting function. This article will outline how the financial industry developed metadata use cases the hard way.
Financial Institutions and Transparency
The 2008 Global Financial Crisis revealed to the world the shortcomings of governance within the financial sector and the necessity of having checks and balances within corporate environments. It wisened regulators, investors, customers and financial institutions themselves about the importance of transparency within the industry. Much stronger oversight of banks and financial institutions by regulators was introduced. Many regulations were implemented or changed to ensure sound business practices, focused on priority areas to improve business practices like exercise of shareholder rights, remuneration and risk management. Despite the tolls of the crisis, an important lesson was learned: banks and financial institutions must have a way of being transparent.
This realization came while increasing data regulations globally exacerbated another problem they had: financial institutions were sorely lacking a mechanism to comply. The introduction of the GDPR in 2018 and other data protection regulations left financial institutions scrambling to become compliant whilst avoiding cost blowouts. The rate of data consumption for all enterprises continues to rapidly increase. Enterprises were unable to keep stock of all their data in landscapes cluttered with duplicates and unusable assets. With no way to organize the existing data or control incoming data, financial organizations found it impossible to remain compliant unless drastic changes were made.
Data Governance Solution
Manually managing organizational data was impossible. Amidst the massive influx of data, poor data quality and chaotic data landscape, financial firms found that the only way to remain viable was to implement a data governance framework. Businesses found that leveraging automation to manage their data landscapes served as the solution to remaining on top of regulatory pressures. Financial firms were able to clean out their data landscapes, organizing and cataloging the enterprises’ data from a chaotic mess to an inventory of trusted information. With data being managed automatically, data stewardship teams could focus on enacting data security initiatives as opposed to sorting out the data landscape.
Business users within an organization would have to scour the data landscape or acquire the information themselves to generate reports for regulators. This would result in valuable time being wasted, cause duplications and inevitably lead to human errors being made in the process. An additional benefit of metadata management adoption is that business users are now simply able to search for the information they need. The information would be trusted, in usable forms and readily accessible. Now, the user can focus on generating the report with all the right information instantly at their disposal. With data governance, they are able to essentially skip the arduous task of locating the data they need, converting the data to a form they can use, figuring out if they can trust it, or just deciding to recreate the data asset again because the user decided they couldn’t trust the organization’s existing data because it is in disarray.
Build Trust with Metadata Management
The financial sector is constantly under a magnifying glass by shareholders, auditors, regulators and market experts. The financial crisis alerted the financial sector to the importance of being transparent and with the burgeoning age of data, regulations were imposed to ensure data is handled securely. Through overcoming these challenges with metadata management solutions, financial institutions realized that data governance has much more potential than just allowing them to remain compliant. With more trust in their data, financial institutions were able to confidently present information to regulators and shareholders customers and thus were able to build with their customer base. Moreover, it increased their trust in data, stimulated workflows, generated unique insights, facilitated business strategy and boosted overall value.
With the combined pressures of overwhelming data privacy regulations and a lack of public trust, financial institutions turned to data governance as the solution to remaining compliant. Upon doing so, these organizations began to realize the value of being empowered by metadata tools. In the next part of this article, how data lineage functionality especially elevates financial institutions will be elaborated upon. To learn about Alex Solutions is getting top banks data-driven, please request a free personalized demo below.