Chief Data Officers 2.0
How CDOs are leading organizations to drive value from data, while maintaining customer’s trust
The chief data officer (CDO) role is a recent addition to the C-suite, and it’s a role that’s evolving rapidly as data becomes increasingly pivotal to organizational strategy and success. CDOs often find themselves at the forefront of some of the greatest developments transforming business, a position that brings both challenges and opportunities.
Open banking and data monetization are emerging as two of the most significant and challenging opportunities CDOs may soon face.
In open banking, banks use application programming interfaces (APIs) to share their data with third parties to enable the development of innovative products and services that enhance the customer experience. It’s a development that reflects many customers’ day-to-day habits, as a growing number of consumers are banking with both traditional banks and newer, non-traditional fintech firms. Regulators are pushing for open banking as well. The European Union’s revised Payments Services Directive 2 (PSD2) requires banks to open up their data to third parties, for example, and the United Kingdom’s Competition and Markets Authority has mandated the country’s largest banks to adopt open-banking standards.
It’s inevitable that open banking will require banks to give up some degree of control over their customer data, which raises significant data privacy and security concerns about data sharing. CDOs will need to take the lead in driving the effective integration of data into any open-banking strategy. This will include establishing a privacy and security structure for all enterprise data and ensuring that different data categories are appropriately identified and secured, so that data is shared with third parties according to proper protocols and security standards.
As financial institutions and other organizations unify data assets and deploy artificial intelligence and machine learning to derive insights from vast volumes of internal and external customer data, they’re taking the first steps towards a new opportunity: data monetization. Companies can monetize data to create a new revenue stream or line of business, achieve competitive differentiation or advantage, drive corporate or shareholder value, or strengthen relationships with partners, suppliers, or customers.
It seems likely that CDOs could be made responsible for commercializing their organization’s unified data assets and for purchasing other companies’ data assets. (Gartner forecasts that by 2020, one in four major organizations will become data suppliers or consumers through formal online data trading.) While data monetization may not be on the immediate horizon for most organizations, it’s a development CDOs can prepare for today. They can begin by considering how their own organization could monetize its own data assets and identifying the kind of data sets it might want to buy in the years to come.