Battling the Unique Data Challenges for Financial Firms

Wayne Parslow, Executive Vice President for International at Validity

25.05.2021 06:15 pm

data

One of the top business priorities for 2021 across the finance industry is the ability to effectively manage large volumes of data from multiple streams – including customer information, financial transactions, marketing campaigns, software logs and so on. However, with financial firms facing more stringent regulation than other industries, managing this data can potentially become an overwhelming task with little to no room for error.

Last year, organisations received £155 million in GDPR fines, and according to Statista, the average cost of a single data breach in 2020 across all industries worldwide was nearly US$4 million. The costs of failing to keep data accurate, secure, and compliant are high, but financial firms also need to be more prudent to the reputational damage and loss of consumer trust.

Data challenges

In addition to the increased regulatory and reputational pressure, financial organisations face a unique set of data management challenges. For example, duplicate data resulting from data silos and exchanges pose a significant compliance threat and can lead to highly sensitive personal information and account details appearing in different formats, making it difficult or near impossible to automatically reconcile.

Further data challenges uniquely impacting the industry include the mass closure of high street branches and the shift to paperless banking as more customers prefer to bank online. While convenient and environmentally friendly, fraud has more than tripled with the move to online banking. Identity fraud was the most prevalent (70%) scam in 2020, and in order to detect fraud, quality data that is up to date is required.

Data management for business success

To overcome these challenges, the priority for financial organisations should be to reassess their data for accuracy, completeness, duplicates, and inconsistencies. This will ensure that data is housed in the right location and fit for the firm’s current needs – for example, ensuring data is up to date and can easily be analysed and reported on.

With more flexibility to work in the office or from home, standardisation of data and removal of silos is more necessary than ever to allow data to move in the right way through the organisation. For example, a finance team may need to produce reports based on the outgoings of several teams across different markets and having best practice standards in place means these initiatives can be completed more easily and efficiently across the organisation.

With the ever-changing nature of data, there’s great business value in verification for existing customers through external sources just as much as there is for new prospects. Verified data can also be enriched with other key data points to drive a better understanding of the companies you work with which can help boost revenue.

Once these processes are in place, the right technologies and tools can also ensure the management of data can be a simple yet effective process.

The bottom line

Maintaining quality data and effective management is a complex network of processes and ongoing actions, but embracing a data-driven strategy has proven its worth as Forrester reports that such businesses are growing 30% year-over-year. Evidently, adopting a data governance mindset with teams always striving for quality data means financial services can capitalise on the data-driven business opportunities and improve their success overall.