Banks collect and manage a lot of sensitive data. The moment an individual opens an account, you’re asking them for information that needs to be protected, from name and address to social security number. And, the data collection doesn’t stop there — rich insights like transactions and purchasing information help to round out customer profiles. With all of this collected data, financial institutions have an incredible opportunity to improve services and make informed decisions – if they can use this data safely.
“Today, financial institutions find themselves competing to deliver the personalized experiences consumers have come to expect from companies like Amazon. Data is both the enabler and the competitive advantage behind these experiences.”
— Satyen Sangani, CEO and co-founder, Alation
Of course, bank leaders’ number one priority is their customers. Internal and external auditors work with many different systems to ensure this data is protected accordingly. This is where data governance comes in: A robust program allows banks and financial institutions to use this data to build customer trust and still meet compliance mandates.
What is Data Governance in Banking?
Data governance means putting in place a continuous process to create and improve policies and standards around managing data to ensure that the information is usable, accessible, and protected. In banks, this means:
- Setting data format standards
- Identifying structured and unstructured data that needs to be protected
- Tagging data types
- Creating roles and assigning responsibilities
- Establishing metrics to quantify effectiveness
- Incorporating automation
- Monitoring and measuring to identify improvements
Establishing a data governance program can feel like an overwhelming task, especially at the beginning. But, when you have all of the data governance puzzle pieces in place, it allows for better business strategies and supports ongoing compliance programs.
The Value of Data Governance in Banking
It’s easy for banks to look at everything from a compliance point of view. After all, they have regulators coming into their offices on a regular basis, checking off boxes and monitoring their activities. But data governance does more than just keep the auditors happy — it can support business initiatives as well. Some key benefits of a data governance program include:
Driving Innovation
Your bank may be thinking of ways to better connect with customers, creating new products, or changing how you operate. Or perhaps, your bank is looking to expand its reach by acquiring a smaller bank, or by opening a new branch. These decisions aren’t done in a silo; for senior leadership to make educated decisions to adopt innovation and move the business forward, they need access to the right data.
Enabling data access is just the first step. This data also needs to meet quality standards to be trusted. If there is duplicate, outdated, or incorrect data, you simply can’t rely on this information to make decisions. Everyone in the organization, from analysts to senior leadership, should feel comfortable and empowered to use data. Data governance programs ensure you are delivering trustworthy data.
Unlock Market Insight
Senior leadership teams and the Board of Directors at banks are continuously looking at market trends. And throughout the year, your Asset-Liability Committee (ALCO) also reviews risks from a balance sheet and market perspective.
If you want to use analytics as part of this review, you need data governance. Whether you’re looking at market share or stock prices, you want to use all the data possible (both structured and unstructured).
Improve Existing Policies and Procedures
Perhaps you already have data governance policies and procedures in place. The question is, are they working to enable your employees? And can you measure that impact and put that knowledge to use to improve your governance?
For instance, if your analytics team spends more time cleaning up data than analyzing it, that is a problem. At this point, you’re not using either your digital or human resources effectively. Adoption of a continuous governance process that includes monitoring current policies to understand their actual usage and impact, and iterating your current policies and procedures, can result in both better data management and higher quality data. This means that you’re optimizing all your resources, not just the technology ones.
Maintain Regulatory Compliance
Banks need to keep all collected information secure. As a result, you need to know what data you have access to and where it’s located at all times to ensure the right controls are in place. This is especially important as banks migrate data to the cloud. Knowing where your data is, how it needs to protected, and what regulations it may fall under is a critical step in migrating to the cloud.
With appropriate tagging, data governance helps you meet compliance requirements by establishing appropriate security and access controls.
Data Strategy in Banking
Data strategy in banking requires taking both an offensive and defensive approach.
Most banks and financial institutions understand defensive strategies. These include things like:
- Protecting data and enforcing data privacy
- Ensuring the integrity of financial reports
- Identifying, standardizing, and governing authoritative data sources
But, you also need to keep offensive data strategies in mind. This includes using data to increase:
- Revenue
- Profitability
- Customer satisfaction
Balancing the offensive and defensive can be difficult, especially for banks. You want to use data to drive better customer experiences, yet you’re also saddled with intense regulatory oversight. Using data catalogs effectively can support a flexible and robust data governance strategy.
Examples of Data Governance in Banking
Ultimately, data governance should be an asset for your business, not a hindrance. Take a look at how other institutions are using data governance to their advantage:
Mission Lane Enables Collaboration
With over 100 data sources, Mission Lane needed a way to document the data they have and put it to practical use to acquire and manage customers, reduce risk and determine fraud. Creating a data catalog makes it easier for analysts to discover data and assess quality. This not only increases productivity, but it also lets everyone collaborate better and make decisions more effectively.
Fifth Third Bank Reaps the Benefits of a New Approach
Fifth Third Bank has over 450 people using data every day. To better use data to improve compliance and provide an improved customer experience, they moved from a command-and-control governance approach to a non-invasive governance approach and saw significant results. Says Sebastian LaRosa, Director of Data Platforms, Vice President at Fifth Third Bank, “Data is at the core of running our business and Alation is at the center of our data ecosystem. By empowering our teams with knowledge about our data, we are lowering the barrier for generating insights, and can provide a better customer experience.”
Using Alation for Banking & Financial Services
Alation makes it easier for financial institutions to balance their offensive and defensive data strategies. Our data catalog breaks down the department-specific data silos that financial institutions often have in place, which enables leadership to drive innovation and deliver better services and experiences.
Because banks need to meet strict compliance requirements, Alation enables active data governance and facilitates compliance activities. We provide a way to comply with Basel, GDPR and many more regulations without limiting your ability to use data effectively.
The ability to use data effectively while still mitigating risks is more important than ever. Today’s data-driven businesses can use data governance to grow without worrying that their analytics will put them at risk.
