Data Management

10:01 AM
Greg MacSweeney
Greg MacSweeney
Commentary
Connect Directly
Facebook
Google+
LinkedIn
Twitter
RSS
E-Mail
50%
50%

Raising the Data Management Stakes

Data management can get firms only so far. Advanced data analytics is needed for all business lines and for calculating risk, especially with BCBS 239 on the horizon.

Data has always been the lifeblood of financial services. Despite the focus on trading floors, algorithms, mobile banking, and high-frequency trading, no business line in the industry could run without access to data.

Though retail banking is certainly dependent on data, it still has tangible products -- bank branches, tellers, ATMs, and cash transactions. But the capital markets and investment management segments of financial services are truly data-driven businesses from start to finish.

Portfolio managers need data to calculate values and look for investment opportunities. Traders need clean and fast market data to identify trading opportunities. Investment bankers need data to valuate deals. In short, all these business lines would take on a lot more risk if the data led to the incorrect decision.

[Do you aspire to the C-suite or some other spot in upper IT management? Then bulk up your credentials around today's most pressing IT movement, digital business, at the InformationWeek IT Leadership Summit.]

The reliance on data is one of the reasons the industry has done such a good job and at the same time such a bad job managing data over the years. With every part of the business relying on data, capital markets basically created the data management discipline a few decades ago. Today many firms have a chief data officer (CDO), who runs a company's data management organization. There are methodologies and best practices built around managing data in the most efficient way.

That said, business demands and corporate culture have led to a lot of data management fragmentation and divergence from best practices. Though firms often knew what they should do to manage data, everyday business challenges often had data managers settling for less-than-ideal data management plans. These plans often created multiple data replicas and inefficiencies. Most large organizations have multiple copies of data, as each business unit requires a unique version, resulting in replicas that are costly to maintain.

Today, however, regulators look to data managers to do more to help improve risk reporting. The Basel Committee on Banking Supervision has issued BCBS 239, a directive on what's commonly known as risk data aggregation. RDA requires banks to report risk from across the company. The goal is to increase transparency into a bank's financial well-being to help regulators identify firms that could harm the global economy if they ran into economic trouble.

[For more on BCBS 239, read: 8 Things You Probably Don't Know About BCBS 239.]

John Bottega, a longtime financial services CDO, calls BCBS 239 "the data management manifesto." For data management professionals, the new regulation is not only validation for the work they have been doing, but also a call to take data management to the next level. By all accounts, meeting the new RDA requirements is a tough task, but it seems like one that data managers are eager to tackle.

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
allang119
100%
0%
allang119,
User Rank: Author
9/30/2014 | 8:59:30 PM
Re: Time to shine
Basel's Risk Data Aggregation and Risk Reporting mandate, also known as BCBS239, is focused on improving the quality of risk information reported to the board and senior management. Regulators want financial institutions to assure a higher degree of data quality that is reconciled with the books and records of the firm. They are requiring controls surrounding risk data to be as robust as those applicable to accounting data; that risk data be reconciled to accounting data to ensure that the risk data is accurate; and that a financial institution should strive towards a single authoritative source for risk data.

The Sarbanes Oxley (SOX) Act in the US requires auditors to perform an audit of the trail of financial information and the adequacy of internal controls that lead directly to postings to the general ledger. Auditors use the COSO (Committee of Sponsoring Organizations of the Treadway Commission)Internal Control—Integrated Framework for SOX compliance. This process is analogous to that which is required in BCBS239, really an extension of the trail of internal controls from the risk management system to the sub-ledgers and general ledgers of the firm.

The auditors internal control role and the use of the COSO framework extended to risk control audits would be a natural  and logical extension of auditors internal control audits to fulfil regulators BCBS239 due diligence. 

 
NJ_trader
50%
50%
NJ_trader,
User Rank: Moderator
9/30/2014 | 1:49:44 PM
Time to shine
BCBS is basically what data management practitioners have been trying to do for the past 10 years. Now, however, banks must move to meet the regulatory requirements. So, it's time for these data managers to really show what they can do!
More Commentary
A Wild Ride Comes to an End
Covering the financial services technology space for the past 15 years has been a thrilling ride with many ups as downs.
The End of an Era: Farewell to an Icon
After more than two decades of writing for Wall Street & Technology, I am leaving the media brand. It's time to reflect on our mutual history and the road ahead.
Beyond Bitcoin: Why Counterparty Has Won Support From Overstock's Chairman
The combined excitement over the currency and the Blockchain has kept the market capitalization above $4 billion for more than a year. This has attracted both imitators and innovators.
Asset Managers Set Sights on Defragmenting Back-Office Data
Defragmenting back-office data and technology will be a top focus for asset managers in 2015.
4 Mobile Security Predictions for 2015
As we look ahead, mobility is the perfect breeding ground for attacks in 2015.
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - Elite 8
The in-depth profiles of this year's Elite 8 honorees focus on leadership, talent recruitment, big data, analytics, mobile, and more.
Video
5 Things to Look For Before Accepting Terms & Conditions
5 Things to Look For Before Accepting Terms & Conditions
Is your corporate data at risk? Before uploading sensitive information to cloud services be sure to review these terms.