April 2019

With more regulatory oversight of client data and what financial institutions are doing with it, it’s easy to miss the intent of the regulations themselves. Chris Daniels shares his perspective on how data governance and a culture of innovation can combine to create value for clients

Every day, Facebook generates four petabytes of new data1 which is equivalent to 100 million 3.5 inch floppy disks. The amount of data being generated by these and other platforms is just one of three ways in which data is playing an increasingly prominent role in every aspect of our lives.

The second, and most obvious way data is playing a role is the variety of data that is now collected and available: virtually everything we do that uses technology to execute or organise leaves a trail, including the places we visit with a smart phone. The third is the speed of data: we are getting increasingly used to real time data being available such as the guided browsing experiences adapting on the fly when we are watching Netflix or shopping on Amazon.

The opportunities unlocked by the availability of data and the low cost of public cloud storage and computing are almost endless. The ability to provide very tailored and personal insights to customers, to look across demographics or markets, to find patterns and correlations in vast sets of data far beyond what a human could ever possibly process, or bring together very diverse sets of data from all aspects of our lives or businesses, open up new product and service opportunities across all sectors. This is without even looking at the use of artificial intelligence on that data.

Watchful eyes

It’s not surprising then that regulators are focussing on what institutions are doing with that data – be it the control of personal data under the EU General Data Protection Regulation (GDPR) which puts the power back in the hands of the individual or in the Basel Committee on Banking Supervision’s BCBS239 which sets out a series of principles2 to drive effective practice in how banks manage data, with a particular focus on risk data. This is to ensure that data is well handled and not misused and marks a shift in focus as regulators wrestle with staying relevant and up to date with a world where technological advancements are rapid and diverse. The Facebook-Cambridge Analytica3 scandal is a standout example of what the regulators now work to safeguard us against.

Regulation – a cost or an advantage?

Regulatory compliance is something that banks have to plan and resource and accordingly can be seen as a cost to the business. Many institutions have set up standalone data governance functions and spun up related programmes in their businesses, as is the case for GDPR or BCBS239. Whilst these will ensure delivery against the mandated scope of the regulation, they can miss the intent of the regulators in trying to drive a change in approach and culture.

Within Deutsche Bank Securities Services we have brought together the business focus for data innovation with the governance expertise we have within the bank’s Chief Data Office to build a compelling business case that covers both execution and control in one joined programme.

The regulators want to ensure we have understanding, ownership, tracking and control of our data. This should of course be exactly what we want ourselves if we are to do good job of creating client value with the data we have. By aligning this focus we get to leverage a tight partnership with our control functions to help us execute our business agenda. We deliver helpful products to our clients, backed by strong governance and can demonstrate to our regulators the maturity with which we approach data.

Differentiating with data going forward

With the launch of our analytics platform in 20184 we not only brought to the market a new core competency for our Securities Services clients but we piloted the adoption of a number of key capabilities in partnership with our Chief Data Office. Whilst using an agile approach we started our regulatory focus on the data we were using. To do this we proactively partnered in the use of strategic data standards, data quality measurement tools, data cataloguing and lineage to ensure our product offering was not only ticking the boxes of our regulatory commitments but embodying the intent of our regulators in driving best practice for data.

With this strong foundation and the effective partnerships we have built between business data owners and our Chief Data Office colleagues we firmly believe we have the right culture and control framework to drive our data agenda through 2019, as we move to expand our platform with real-time stream processing capabilities, which ensure that we can compute on data directly as it is produced or received, as part of our roadmap. This will allow us to navigate the ongoing exponential increase in the size, variety and speed of data we manage as custodians as we drive to provide quicker and better insights to our clients.

Chris Daniels leads data products in the Securities Services team at Deutsche Bank

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1. https://kinsta.com/blog/facebook-statistics/
2. https://www.bis.org/publ/bcbs239.pdf
3. https://www.theguardian.com/news/2018/mar/17/cambridge-analytica-facebook-influence-us-election
4. http://cib.db.com/insights-and-initiatives/flow/dashboard-dynamics.htm

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