Financial institutions are increasingly seeing the need for an increased focus on investments in technology and data governance that can provide standard-yet-granular and high-quality data to support financial stability, and help with monitoring their safety and soundness. The right kind of data must also be easily accessible and malleable enough to be re-purposed as needed, and provide actionable insights and analysis. Beyond regulatory compliance, executives understand that their firms stand to reap other business benefits that can provide competitive advantages. This was echoed in a recent survey where CFOs were asked:
Figure 1: Deloitte LLP CFO Signals 4Q ’17, CFO Role in Business Planning p27. Published 10-Jan 18
How did the industry get here?
One of the outcomes of the financial crisis was the enactment of the Dodd-Frank Act and other requirements (such as Basel III, Comprehensive Capital Analysis and Review (CCAR), and Capital Liquidity Analysis and Review (CLAR)), which centered on granular, high-quality data throughout financial institutions, including heightened internal controls through an enterprise-wide governance structure. Today, most key executives such as chief financial officer (CFO) not only have to know and analyze their data as part of risk monitoring, but are mandated to attest to the quality of their data (e.g., CFO attestation).
In short, the impact of the crisis and increased regulatory requirements has changed the business landscape. Financial institutions must not only make operational changes to meet regulatory requirements, but they must also strategically position themselves to increase the business value for making investments. A key question is, “How do firms make the requisite investments to not only help comply with their regulatory requirements but also help enhance business value across the enterprise?”
Investments that pay back
While many executives are examining ways to a foster growth in their plans, capital efficiency and returns remain a focus. Financial institutions can consider the following examples of investment areas and potential payoffs when formulating their technology and data governance strategy:
From the design and build stage, financial institutions must think of the needed components to design / adopt a strong data architecture and technology that supports compliance with current regulatory requirements and can nimbly accommodate future changes, in light of ever evolving regulatory requirements. A strong governance framework is needed to implement robust quality controls, risk assessments, and on-going monitoring and testing. Results of monitoring and testing activities should inform proactive data compliance management.
How Deloitte can help
With an understanding of the maturity level of a data infrastructure and governance, our services can be provided through both a tactical and strategic model presented below, fostering a sustainable approach to help reduce cost and increase efficiencies:
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