Organizations serving in financial services that don’t know their Data IQ are in for unpleasant surprise as research points to data being the industry’s most important asset.
While more than 80 percent of executives in the financial services industry consider their company’s data “their most important strategic asset,” less than half regularly audit their data quality.
That’s according to a new 2015 report by Ernst & Young (EY), a multinational professional services firm, titled The Science of Winning in Financial Services, where researchers surveyed 150 major financial services organizations around the globe. In the report, EY analytics leaders Hyong Kim and Errol Gardner found data is quickly becoming the “fourth organizational pillar,” along with people, processes and technology.
What’s astounding, however, is the lack of data governance at these organizations despite identifying data as a leading strategic initiative. More than four in five executives surveyed (83%) told EY that data is their most important strategic asset, with the same number saying it will soon be the source of major competitive advantages.
“We’re turning ourselves into a data-centric organization,” HSBC Deputy Chief Data Officer Lorraine Waters told EY. “We’re increasing the awareness that in this digital age the quality of our data and the way in which we put it to work is absolutely key.”
Waters’ comments ensure that HSBC is one of the few organizations surveyed who is developing a strong data quality culture. Only 49 percent of those polled say they conduct regular data quality audits to get a handle on data governance. Even fewer (39%) said the organization regularly trains staff on governance policies and procedures.
However, with the practically infinite number of risk assessments and data vulnerabilities involved in the financial services industry, not knowing your Data IQ – data integrity and data quality – is a surefire way to lessen your competitive advantage and get behind.
Data IQ Taking Quality a Step Further
Data integrity and data quality – they’re two terms that experts have used synonymously, but deserve separate and equal attention.
As Infogix’s chief product officer Bobby Koritala explains, integrity and quality are two takes on the same concept. He believes the issue is that the concept of data quality has been around for a while, and analysts have defined it in a very particular way. Because of that very restricted definition, it leaves out some of the most significant portions of what organizations must be concerned about.
To put it simply, financial services organizations should build a foundation of data governance by implementing visibility into data integrity. Placing end-to-end data integrity controls throughout the organization – not just in silos – will provide enterprise visibility through automating four key processes: verification, balancing, reconciliation and tracking (or VBRT).
True data governance coverage, however, is achieved when companies layer on data quality controls. Inspecting individual critical fields for key data quality dimensions, like the four C’s – completeness, type conformance, value conformance and consistency – drastically minimizes bad data and reduces the impact of “garbage in, garbage out.” Checking data quality at the field level (data element) provides a valuable level of granularity to ensure informed decisions through the use of automated business rules. These validate data fields such as account number schemas and follow established corporate rules and policies.
Combining both data integrity and data quality makes up a business’ Data IQ. It seems like a simple practice, but it’s one many financial organizations don’t focus sufficient attention to or monitor as a part of a sound data governance strategy.
For example, every bank and credit card company is tasked with reconciling all the important financial data they receive from every employee at every location, and it needs to be executed every night. While reconciling these millions of important financial data points seems like common sense, so many financial organizations don’t have the controls or capacity in place to take this action.
When millions and billions of dollars are at stake, not to mention compliance, fraud and other risks, making your Data IQ a priority is a strategic necessity to ensure customers trust your data and that sound decisions are being made based on quality data.