ENVISION a closet overflowing with various items, each once deemed indispensable. The challenge of decluttering and determining the fate of these items — whether to keep, discard, or donate — is a struggle for many people.

Similarly, data governance in banking is like organizing a closet. Bank executives frequently express frustration over scattered data and not knowing its source. In addition, there is the difficulty of ensuring reliability and safeguarding data privacy. This situation underscores the critical importance of robust data governance.

To understand why data governance is considered critical for the banking and finance industry, David Irecki, director of Solution Consulting, APJ, Boomi, discussed with The Manila Times the challenges facing financial services organizations as they modernize and how to address these hurdles.

Changing times

David Irecki started with a situationer on these challenges. He pointed out that rolling out new cloud applications or Internet of Things (IoT) devices into an environment where legacy on-premise systems are already in place means more data silos and data sets to manage. Invariably, this results in data volumes, variety, and velocity increasing much confidence quickly for banks.

"This situation gives rise to IT complexity — driven by technical debt or the reliance on systems that are cobbled together and one-off connections," Irecki said. "Not only that, it also raises the specter of 'shadow IT,' as employees look for workarounds to friction in executing tasks. This can create difficulties for banks trying to identify and manage their data assets in a consistent, enterprise-wide way that is aligned with business strategy."

"Ultimately, barely controlled data leads to errant financial reporting, data privacy breaches, and non-compliance with consumer data regulations. Failing to counter these risks can lead to fines, hurt brand image, and trigger lost sales," Irecki added.

Arguably more importantly, failure to protect personally identifiable information (PII) of consumers, suppliers, and employees entrusted to the banks could erode confidence in the financial sector itself.

Holistic approach

Irecki clearly understood that overcoming these trust risks rests on having the right approach toward privacy protection, while delivering consistent, timely, and accurate information that is accessible at a moment's notice to authorized persons.

The Boomi executive says that a holistic data governance framework should directly address the following business issues:

– Regulatory compliance and risk management. The financial services sector is tightly regulated. Banks are exposed to significant risks. By improving the quality and reliability of data, a comprehensive data governance framework minimizes compliance risks and aids adherence to regulatory mandates.

– Operational efficiency. Upstarts such as fintechs have upended the traditional finance industry landscape and can now deliver diverse financial services faster than their legacy counterparts. To keep pace with these new entrants, a clear strategy to boost the operational efficiency of traditional banks is to eliminate data redundancies, reduce errors, ensure data consistency, and orchestrate efficient data processing, which are the hallmarks of a working data governance framework.

– Customer experience and satisfaction. A robust data governance policy, based on high-quality, actionable data, allows banks to provide up-to-date, personalized services that enhance the customer experience. This, in turn, improves customer satisfaction and loyalty. Data governance also helps banks manage customer consent and preferences in compliance with regulations, such as the European Union General Data Protection Regulation (GDPR), by offering mechanisms to capture, store and update customer consent preferences.

– Innovation and competitive advantage. Reliable, high-quality data builds a solid foundation to identify new opportunities, analyze trends, develop innovative solutions, and gain a competitive edge. Armed with the ability to undertake advanced analytics, banks can drive innovation as well as identify upsell and cross-sell opportunities.

AI power

Irecki argued that a systematic approach is needed for implementing a data governance strategy. He clarified, "AI-powered automation and a low-code, cloud-native platform can enhance data governance strategies of financial services organizations. This multi-dimensional platform enables full configuration so that data can be delivered securely when requested. Its capabilities also empower financial services organizations to mask sensitive data via roles-based permissions, preventing them from being viewed by unauthorized users."

The Boomi executive concluded that a solid framework and automation driven by a low-code, cloud-native and unified platform will position banks to capitalize on emerging opportunities. By being on top of data as it proliferates, banks can compete at ever-faster speeds, unlocking the flexibility and innovation to thrive.