GS1 US Looks at How to Help Financial Services Industry Solve Standards Challenge

NEW YORK—The US chapter of the international standards organization GS1 is assessing opportunities to create and manage classification schemes for the financial services industry to improve standardization, officials tell Inside Reference Data.

GS1, which has a presence in 108 countries, manages international standards for a large number of industries, such as retail and healthcare, but has so far not been involved in the financial services industry.

Bernie Hogan, senior vice-president and chief technology officer of New Jersey-based GS1 US, says the GS1 standards model has proved to be successful for 40 years now, with the barcode and identification system for the retail industry being one of the best known identification schemes. "Based on preliminary analysis, it looks like the GS1 system could be used by the financial services industry," he says.

The organization is continuously adding new standards, and GS1 in the US now serves more than 20 industries. The addition of standards for the financial industry can be based on the same model and approach as GS1 uses for other identification schemes.

"We sometimes have to make adjustments for different industries' needs, but it's more about having a focused adoption process," says Hogan, adding that the more industries GS1 covers, the more value the organization is providing.

If GS1 were to enter the financial services space, the organization would help administer standards and ensure everyone uses the same standards. The organization could potentially also expand coverage of some of its existing standards, such as the Global Location Number standard, which identifies physical locations and business entities.

The existing standards are already used by 1.5 million GS1 customers around the world, and many of these represent issuers, also relevant to the financial services industry. "We have a base that could just be extended," says Hogan.

GS1 standards, in many cases, are also ISO standards. "We participate in ISO on multiple levels, and a lot of our standards are submitted through the ISO process," he says, explaining that GS1 collaborates with ISO to ensure there is no duplication and to broaden reach.

Regulatory Pressure

Meanwhile, the increased pressure from regulators to improve transparency in the financial services industry has resulted in a growing focus on standards. Market participants suggest the standards problem has to be fixed before regulators can use data collected from the industry to analyze systemic risk.

The concern now is that the regulators will have to create standards for the financial services industry – something that could be done by an existing standards organization instead.

New York-based Richard Tinervin, Financial InterGroup Advisors, says some standards may need to be tailored, but the GS1 model has already proved to work in other industries. "GS1 works with each industry to come up with the appropriate system," he says.

Financial InterGroup Advisors, which earlier this year announced the introduction of a working group for the Central Counterparty for Data Management (CCDM), an initiative focused on bringing C-level executives together to promote a global data management utility in the financial services industry, has put together a project and business plan, where standards-setting is part of the focus.

New York-based Allan Grody, president of Financial Intergroup Advisers, says the idea is that the CCDM will arbitrate different content and put out arbitrated content sets. This type of utility approach would also be dependent on industry standards and promote operational efficiency and risk mitigation.

Yet, it is designed not to jeopardize the business models of data vendors nor the investment in legacy systems of financial institutions. "Some of the solutions [suggested for reference data utilities] require data vendors to give up the proprietary data models, which they use to produce their products and compete," says Grody, explaining that this will not be the case with the CCDM.