Data Quality Management: renewed focus and momentum in Banking sector has been saved
Data Quality Management: renewed focus and momentum in Banking sector
How COVID-19, regulation and digitisation drive data quality
The changing Risk Management environment has renewed focus and momentum in the global Banking sector. The continuous shift in the risk landscape addresses the need to enhance risk data capture, access, and monitoring processes to become more responsive. What are the internal and external drivers for Data Quality Management? Read the latest findings and perspectives in the first of a three-blog series.
Global struggle with banking data quality
Recently, Deloitte conducted its Global Risk Management Survey 2020, based on the contributions of 57 financial institutions in the world. As the survey was set in the context of a pandemic and an economic downturn, causing continued uncertainty, Risk Management was refocused. Trends prevalent to the pandemic became even more evident, such as the continued struggle with data quality and data quality management.
Risk data as a top risk management priority
The changed environment has emphasized that key issues need to be managed effectively. Also, it highlights the challenges around non-financial risks, with a prominent theme around data. According to 69% of the respondents, enhancing the quality, availability, and timelines of risk data will be a top risk management priority. Inherent to these challenges are clients’ implications to take advantage of the latest technologies. This requires accurate, comprehensive, and timely risk data.
Risk Data Management
The continuous shift in the risk landscape addresses the need to enhance risk data capture, access, and monitoring processes to become more responsive. Hence, finance organisations are impacted by the central role of risk data in technological transformations and risk management programs. Also, the collaboration between finance and risk departments is vital for the identification of common data, its definitions and sources in order to enhance data quality controls across the risk management environment. For instance, the impact on regulatory reporting that involves a combination of risk and finance data.
Concerned about data quality
The results of the survey show the relevance to the situation sketched above. Significant and large-scale data quality improvement processes can impact both internal and external reporting activities. Managing data quality throughout these processes, execution of the data sourcing strategy and the data standard within an organisation is considered as extremely or very effective by only one fourth of the respondents. In conclusion, 49% of the respondents are very concerned about their risk data and quality management within their information technology systems.
What drives the renewed momentum for Data Quality in Banking?
Zooming in deeper into the importance of data within the finance and risk departments of banks, we discern specific internal and external drivers for the improvement of data quality and processes. The following drivers ‘feed’ the Risk Data Management and data quality momentum within Banking:
- The demand for reliable and future-proof credit risk information and models has reached its peak, especially during the pandemic. Accurate and timely risk data will underpin reliable Credit Risk Models.
- Because of the increasing amount and specifications of laws and regulations, the European Central Bank (ECB) is becoming more demanding. Examples are TRIM findings, DNB On-Site Inspections (OSI) and BCBS #239.
- Inherent to the expansion of laws and regulations, organisations need to ensure compliance through reporting on the quality of data used.
- The Banking sector is investing heavily in new age digital services, including digital banking, online credit requests, and greenfield banks, all of which are in need of high quality data.
- The pandemic has changed the risk and finance landscape and has led to additional reporting requirements. It has also caused organisations to rethink current business processes and activities.
- The recently introduced Environmental, Social and Governance reporting requirements require organisations to report on activities that include new, previously unsourced, data.