Like most industries, financial services companies are working feverishly to keep their employees and customers safe, ramp up their ability to support remote access for stay-at-home employees, and ensure existing customers have access to their accounts and key services during this time of need. Business and technology leaders are revisiting and reprioritizing where to invest as budgets are being slashed as a result of COVID-19’s impact on the economy. Banks will see less revenue as consumers tighten spending on nonessential goods and services, while lenders will experience more credit card and mortgage defaults caused by rising unemployment. Similarly, insurers will see a drop in new homeowner and auto policies and an increase in life and unemployment claim payouts.
As with the financial crisis in 2008, it is during challenging times like these that financial institutions need data that is “fit for use”the most—to measure risk, service the needs of their customers, and comply with industry regulators. What do I mean by “fit for use?” Simply put, it is data that is trustworthy, holistic, transparent, accessible, and secure, in order to help businesses do their jobs effectively and efficiently. For example:
- Personal bankers and/or insurance agents will need trustworthy customer contact details, including verified email, phone, and address information, to ensure they can reach their customers for urgent matters.
- Risk analysts need to know the relationship between entities across products, accounts, and business lines to accurately identify the credit risk exposure when a small business goes out of business and the impact that may have on its employees, who may hold a mortgage or a credit card account with the same bank.
- Compliance departments and managers need transparency into how data is created and used to explain to industry regulators how they have recalibrated risk as reflected in their capital reserve balances and regulatory submissions post-COVID-19.
- Employees working from home will need access to data to perform their jobs without having to request or call someone in IT for support.
- Information security teams will need to ensure they know where all of the company’s sensitive data is stored and shared to prevent unauthorized access, as employees and management could be more susceptible to social-engineering efforts by criminals in the midst of the current crisis.
Unfortunately, if data is not yet fit for use, it can expose years of treating data management and governance as second-class citizens to customers, partners, and regulators. For example, problems with data access, trust, and security that have been historically dealt with as one-off IT projects by throwing bodies to write custom SQL scripts and/or implementing siloed tools.
Today, financial services companies across the globe must make tough decisions on how to best allocate their resources to navigate this crisis. Now is the time to recognize how prioritizing and addressing existing data management and governance gaps could be the best investment to both navigate the current challenges and set the stage for growth and business transformation once we overcome them—which we will.