Addressing Critical Data Gaps for Risk Management and Compliance in Banking

In light of the recent and ongoing headlines from the banking industry, I’ve had the opportunity to connect with my customers and colleagues to understand both the short-term and long-term implications of what happened to Silicon Valley Bank and Signature Bank. I listened to their perspective on what is and isn’t working from a data management and data governance outlook in preparation for the “next” market cycle. 

According to industry experts on the air, the current situation is not as bad as the 2008 credit crisis. The recent events did trigger bad memories of the sub-prime market collapse back when I worked for ICE mortgage technology (formerly Ellie Mae). I watched my customers close their doors one after another. 

The industry — including regulators — learned the cause and responded quickly with new regulations, including BCBS 239 and CCAR, and implemented annual DFAST stress tests. Banks swiftly enacted formal data governance programs to assign the required controls, policies, accountability and processes related to the use of critical data elements (CDE) for ongoing compliance. We saw the birth of the chief data officer (CDO) position in banks as well. CDOs have played a major role in carrying out these frameworks and helping establish a culture of treating and managing data as a critical business asset. 

We also witnessed the large number of digital transformation investments over the last three-plus years. These included modernizing legacy on-premises data warehouses to cloud native data lakes, data mesh architecture and data fabric solutions. Major cloud providers like Amazon Web Services, Microsoft Azure, Google Cloud, Snowflake, Oracle Cloud and Databricks were leveraged to support ongoing risk management and regulatory reporting needs. These investments have helped and will continue to assist companies to take advantage of the scale, performance, availability and cost savings from these cloud-native data platforms solutions.  

However, even with the advantages afforded by modern cloud technology, gaps exist in managing and governing data across the industry. Data management and data governance remains complex, costly and fragile. Challenges include having to identify and deal with data quality errors from source systems and achieving end-to-end data visibility and lineage from source to report. 

Despite years of effort and attempts by the banking industry to master critical business data from clients to legal entities, many struggle to identify existing relationships with commercial customers they do business with and the counterparty risk exposures that exist. Data stewards continue to perform their required duties manually using legacy tools to help day-to-day business users gain greater literacy and confidence in the data they need to perform their jobs. 

Addressing Data Management and Data Governance Gaps with Fit for Business Use Data

Given the current industry headwinds, it is more important than ever to address these gaps — not just for the short-term, but to ensure the business has access to “fit for business use” data for even greater agility and competitive strength. This means data that is:

• Accessible to the systems and applications that run your business regardless of source, data type, volume or latency — from on-premises systems to across the cloud ecosystem
• Clean and trustworthy to support critical risk management processes and regulatory reporting needs
• Valid and relevant data about your customers, accounts and counterparties 
• Transparent to ensure you have end-to-end visibility into the lineage of your data to respond to regulatory questions and MRA requests
• Governed to support proper use of existing critical data elements for ongoing risk management and regulatory compliance
• Understood by every business user regardless of their role or tenure to improve data literacy

If you would like to learn how Informatica is helping our banking and financial services customers realize and leverage “fit for business use” data through the Informatica® Intelligent Data Management Cloud™ (IDMC), please feel free to contact me: Peter Ku, pku@informatica.com. Let’s have a conversation to see how we may be able to help.  

In the meantime, watch this quick demonstration of IDMC to see how it helps govern data used for risk management and regulatory compliance.