According to the 1966 musical Cabaret, ‘money makes the world go around’. But in 2023, it could be argued that data is just as pivotal to the earth's rotation.
This is especially pertinent when you consider that every financial services company depends on data.
This is why it’s so important to have a robust data strategy and effective data governance in your financial organization. You need to have confidence in the quality, security, and consistency of your data across the company.
On top of the business benefits, you also have to be careful to adhere strictly to the rules and regulations around data.
Although GDPR technically only applies to Europe, many organizations have customers protected by the regulation, and fines have reached as much as $877 million.
In this article, we will cover:
- What is Data Governance in Financial Services?
- Why Is Data Governance in Financial Services Important?
- Benefits of Data Governance in Financial Services
- How to create effective Data Governance in Financial Services
- Implement Data Governance in Financial Services with OvalEdge
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What is Data Governance in Financial Services?
Data governance can mean different things depending on what your industry is, and what your priorities are. But at a high level, this is how we define it:
"Data governance is the process of organizing, securing, managing, and presenting data using methods and technologies that ensure it remains correct, consistent, and accessible to verified users."
In the context of financial services, it’s the management, control and access of financial data. It involves creating policies and procedures for data collection, storage, processing, analysis, and sharing.
The goal of data governance is to ensure that the data used by these companies is accurate, consistent, and secure, and that it complies with regulatory requirements.
Effective data governance enables financial services companies to make informed decisions based on reliable data, improving their operations and increasing customer satisfaction.
Why Is Data Governance in Financial Services Important?
Data governance is vital in the financial services industry for several reasons.
Firstly, it helps ensure the accuracy and consistency of financial data, promoting transparency, accountability, and compliance with regulatory requirements. With the vast amount of data generated in this industry, it can be challenging to maintain consistency, especially when dealing with multiple data sources across different departments.
For example, calculating average transaction time across various branches can be difficult when using different calculation methods.
Data governance provides a framework for managing this financial data throughout its lifecycle, including how it’s collected, stored, processed, analyzed, and shared. Without effective data governance, financial services companies can’t make informed decisions based on reliable data.
It also provides a secure and compliant approach to managing financial data, ensuring that sensitive information is only accessible to the right people. This is especially important as regulations like GDPR and GLBA continue to hold companies accountable for how they store data.
Benefits of Data Governance in Financial Services
Effective data governance in financial services creates consistency of metrics and reporting across the organization. This allows precise and reliable data, accessible to everyone.
This leads to better-informed data-driven decisions, resulting in cost savings, improved resource allocation, and ultimately better customer satisfaction.
By ensuring the quality and security of financial data, companies can make informed decisions based on reliable data, improving their operations and increasing customer satisfaction.
They can also save costs by identifying areas where resources can be allocated more efficiently. Additionally, data governance promotes transparency and accountability, which can help build trust with customers and other stakeholders.
Arguably the biggest benefit is securing the data itself. The relationship between financial organizations and their customers is built entirely on trust, so it’s important to protect this at all costs.
Data governance helps secure data by implementing strict policies and procedures for collecting, storing, and using data. As well as regularly reviewing and updating these policies to keep up with changing regulations and industry standards.
It also ensures that sensitive information is only accessible to the right people, providing a secure and compliant approach to handling financial data.
Related: Data Governance: What, Why, Who & How. A practical guide with examples
How to create effective Data Governance in Financial Services
There are several steps involved in creating effective data governance in financial services:
Organizing
While there are many ways to organize financial data, using a data catalog tool is one of the most efficient methods. To effectively analyze your data, it is vital first to identify all your data sources, and gather your metadata in one central location.
Having the right tools is essential for ensuring accuracy and completeness in your analysis. Once you have gathered all of your metadata, you can explore and analyze it in greater depth, uncovering insights and patterns that can inform decision-making and drive business success.
You can read more in our Building a Business Glossary article, but here’s a summary of our business glossary process:
- Create a Data Governance group
- Determine where, how, and who is using the terms
- Identify and consolidate
- Standardize terms and definitions and input them into your business glossary
Securing
As previously mentioned, it is essential for any organization to ensure their data complies with both data privacy regulations and internal company policies. Your customers need to feel confident that their data is secure in your hands.
It's important to take a proactive approach to protecting data privacy and security, especially as data breaches are become more common.
You need strict policies and procedures for collecting, storing, and using data, as well as frequent reviews to keep up with changing regulations and industry standards.
In addition, it is important to provide training and resources to employees to ensure they understand their responsibilities in safeguarding sensitive data.
By doing these things, you can build trust with your customers and stakeholders, and mitigate the risks associated with data breaches and regulatory non-compliance.
Managing data
Once your data is organized and secure, it’s important that the right people can manage the data they own. This includes updating and adding metadata, creating relationships, and maintaining the data quality.
This isn’t just the job of one person or team, but the responsibility of everyone across your company to effectively manage the financial data for their team or department.
Reporting
In such a highly regulated industry, as finance, you’ll be required to provide accurate and detailed reports to regulators and auditors.
Whether it’s GDPR, BCBS 239, or GLBA, you need to provide the right data, in the right format, to avoid fines or further issues.
Related: 3 Data Privacy Compliance Challenges that can be solved with OvalEdge
Implement Data Governance in Financial Services with OvalEdge
OvalEdge is a Data Governance platform designed for financial services companies. It provides tools to solve financial data governance problems on a larger scale.
Here’s how we help:
Collection
Before you can do anything else, you must gather your data from across all your data sources. At OvalEdge, we do this with the Data Catalog.
The data catalog provides access to all your data sources in one place, no matter where they are. It serves as the foundation to everything else in this process.
OvalEdge will also automatically classify your data, so it’s easy to identify PII, confidential data, etc. This helps you to apply the right set of policies for your company, and meet financial regulations.
Standardization
Next, you’ll standardize your data using our business glossary feature. A business glossary is a list of terms and definitions organized in a clear and accessible way.
This allows anyone within the company to access and discuss the financial data in a standardized and understandable way.
After standardizing your data, the next step is to classify and tag it. This allows you to create connections between different data, regardless of where it is stored.
Security
The next step is to secure your data using our Data Access Management tools.
You can manage access to all your data centrally, ensuring that only the right people have access to sensitive patient data.
You can also create strong data access policies to ensure compliance with important regulations such as BCBS 239 and GDPR.
Popularize
Once your data is organized and secure, it is critical to inform everyone that they have access to the necessary data.
All organization personnel should then receive training, and be encouraged to use OvalEdge regularly. This will simplify their work and enhance decision-making abilities.
This includes data literacy, data discovery, and integrating with other tools their team or department use.
Manage (with processes)
Finally, it is important to have processes in place that allow you to efficiently manage your data.
It is especially important for people to take ownership and manage the metadata, as outlined in this step-by-step guide on metadata management. This involves developing policies and procedures, utilizing tools, and manually curating metadata.
Your team can also use out auto lineage tools, to help them understand where the data comes from, and where it goes. This is essential for remaining compliant, as they can answer any questions regarding the lineage of the financial data.
These features will ensure that your financial data remains consistent and accessible across your financial organization, while remaining compliant.
