After becoming more prevalent in the financial industry in the US and in Europe, the role of chief data officer (CDO) is now also becoming more widely adopted in Asia—albeit later and at a slightly slower pace than elsewhere. 

Cyrus Daruwala, managing director of financial services and fintech at research and consulting firm IDC Asia Pacific, says the need to create Asia-specific CDOs started about three years ago. 

“The CDO role is an up-and-coming role in Asia-Pacific, not only within the banking and insurance industry, but also within the data-heavy sectors in telecommunications, retail, hospitality and airlines,” Daruwala says, adding that the increase in local CDOs reflects firms’ need to monetize their existing data repositories as institutions started changing their core infrastructure to be more agile, aligning their products and services to be more customer-centric, and placing more emphasis on customer satisfaction. 

“The driver behind this position is to create a center of excellence that helps the institution identify, standardize, analyze, and then monetize … the large swaths of data they have collected over time. These could be transactional data, reference/customer data, or they could be historical data,” he says.

Paris-headquartered insurer AXA has an organization-wide mandate to employ dedicated CDOs for each country it operates in. Ashok Krishnan, CDO and head of customer experience at AXA China Region Insurance, says Asia CDOs started becoming more prominent only in the last two years, driven by factors such as increases in the amount of data being generated. 

“In the insurance industry, the fundamentals of our business are in understanding the data, especially to identify, evaluate and price risk optimally. That’s the crux of it for us. So it is no surprise we started looking at the role early on,” Ashok says. 

Also, in the past, firms lacked the technology or computing power needed to effectively manipulate the data available and turn it into something meaningful. But times have changed: The computing power that was not as available then is now more accessible and attainable. Ashok says the combination of these factors has increased the attention and focus on data. 

Brad Foster, global head of enterprise content at Bloomberg, says while the CDO is a relatively new concept in Asia, he sees a greater number of these roles being created as data becomes both an operational risk and opportunity for firms. 

“Asia is in general a little slower in terms of the evolution of the CDO role, and needs more time in terms of when a CDO is given clear direction and empowerment to make decisions. But it’s quickly catching up,” Foster says, adding that while companies headquartered in Asia would have their global CDO locally, global companies operating in Asia need regional CDOs to oversee how the data supply chain is aligned with their US and European requirements.

The most important factor in a firm’s decision to appoint a local CDO is the maturity level of the firm itself, sources say. 

“The only reason you would see [the CDO role] executed out of headquarters is that the firm is low in maturity and is only starting to produce standard approaches,” says an Asia-Pacific CDO at a major international bank with Hong Kong operations, who requested anonymity.

This CDO adds that it is extremely important to establish the role at the regional and country levels, particularly as a firm increases in maturity. “You have to look at the country regulator, face challenges that organization has in terms of systems structure, processes, and data requirements. For that to happen, the CDO must be at the country level, otherwise it’s just too theoretical an approach if it is executed at the group level. Because the data is owned by the organization in the country it operates in, it changes from country to country. I think you’ve got to have a very thin model at the group level for it to work,” the CDO says.

A CDO’s location also depends on which markets the bank is most active in, adds IDC’s Daruwala. For example, large regional banks—such as DBS Bank and OCBC Bank in Singapore, Maybank in Malaysia, or Bangkok Bank, one of the largest commercial banks in Thailand—are likely to locate their CDOs in their home base: the country that is the primary focus of their operations. 

“Though the nature of the work that a CDO does renders the location as inconsequential, it helps for the CDO to get a pulse of the market that she or he serves. It also helps for them to have an ongoing interaction with the various divisions and data stakeholders within the bank,” Daruwala says. “For some of the more global banks such as HSBC, Standard Chartered, Barclays or Santander, the location of the CDO could be in the same location where they have their technology and operation centers,” he says.

AXA’s Ashok says there are benefits of working locally and reporting to the local C-level executives, rather than having to report to a group-level CEO, which may be the case in other insurers or financial firms. “I think the benefit of that is that we are close to the market and we can be agile for what is right for Hong Kong. It’s more about how we react best to customers’ changing needs. That’s most important because what works in Hong Kong may not be the case for another part of the world,” he adds.

Getting the Most Out of Data

Although the CDO role is only just starting to take off in Asia, those who have already established the role within their organization say it generally helps firms be more efficient and effective. 

Bloomberg’s Foster says that in general, the role of CDOs in large banks is more advanced than in some smaller financial services firms that are not as affected by regulatory changes such as Mifid II. “So the firms that have had a CDO in place for quite some time, and were able to implement their data governance framework, have the ability to release new things faster because they see data as an enabler for their business,” he says.

Indeed, some say the role of the CDO really came to the fore in the aftermath of the 2008 crisis. A 2016 report by consulting firm Deloitte, titled The evolving role of the chief data officer in financial services: From marshal and steward to business strategist, says firms need a senior C-level executive to marshal and govern certain critical data assets, to pay more attention to their data. If firms had managed their data more effectively, it could have provided, at a minimum, a more resilient response to the crisis. 

But still, the role can be vague, and its definition can vary from firm to firm. The Asia-Pacific CDO says a lack of clarity around the responsibilities of the CDO still exists, whether the role is at a country level or at a business-line level. “If I lined up 10 chief data officers and asked them to define their role, I would get 10 different slight variations of how they see their role and what they are responsible for,” he says. 

But however defined, any initiative to create a CDO role must start with having the right intent, says AXA’s Ashok, since the decision to have a C-level role specifically looking at data is a huge commitment—and one that will grow and evolve as firms adapt to what is relevant for their business. 

“In different businesses, for example, data could be all about innovating and coming up with new business models. There could be another way, which is about how we make the existing business more efficient and productive, and in some cases it could be a combination of both,” Ashok says, adding that AXA’s main priority is how to generate more business value from the data it has available. Once that is established, the second and third components are using data to improve customer experience, and improving efficiency of the business using data analytics. “Broadly speaking, it’s about how can we better enable cross- and up-selling to our existing customers,” he says.

Playing Nice

While CDOs have been granted a seat at the C-suite table, they often sit too low in the executive hierarchy to be truly impactful, according to Deloitte’s report. 

“Some financial institutions bury the CDO multiple levels down in the IT department, reporting down from the CIO or CTO. Others place the CDO on the business side of the house, under the CFO, chief risk officer or chief marketing officer because data is understood to be ‘owned’ by the business, not IT,” the report states.

Because a CDO must work with many or all of these individuals and departments, the role in Asia should not be set up with a structure that assumes it only deals with the CTO, CIO, and the chief compliance and control officers. 

For example, AXA’s Ashok reports locally to Andrea Wong, chief marketing and customer officer at AXA Hong Kong, and ultimately to Etienne Bouas-Laurent, CEO of AXA China Region. 

“In terms of decision-making, my team does what is right for the Hong Kong business. Of course, it is in alignment with the overall group business strategy,” he says.

In contrast, the Asia-Pacific CDO’s firm has an Asia-specific strategy, and decision-making remains “very top-heavy. There needs to be more autonomy in terms of solutions, how you fix data, and what decisions need to be made,” the CDO says, adding that this is the case across all the bank’s operations: retail, corporate and institutional. “At the global level, our global CDO has direct accountability across global lines of business: retail banking and wealth management, commercial banking, and global banking and markets.” 

He directly supports country-level COOs, which includes understanding their data landscape across all aspects of data policy, and data risk. His role is making sure that the data team’s developments are aligned with the bank’s quality expectations. 

And it’s not just internally that CDOs must be responsible for breaking down barriers: Given that Asian markets are fragmented not only geographically but also by jurisdictions and regulatory regimes, which leads to fragmented and multi-dimensional data, CDOs in the region play a crucial role, Foster says. While financial firms in the US and in Europe are bound by regulations like Mifid II and Dodd–Frank, there is no singular regulatory overlay for Asia.

 “Combined with radically different political, economic, markets and business environments, high-level data consolidation can be difficult to achieve in this region,” he says.

P&L and ROI for CDOs

A typical bank still operates in “profit and loss silos,” meaning there is no need or incentive for different business units within a bank to share their data with each other, Daruwala says. In this environment, the CDO’s role moves from being a cost center of managing data governance to a profit center role of managing data assets—and should be treated just as strategically as a head of retail banking, corporate banking, or any other business unit. 

“The CDO should have access to all data, transactional or historical data, which means he or she can do more magic with the data. Basically, each division is responsible for their own P&L, and they are essentially lending the data to the CDO,” Daruwala says. 

The Asia-Pacific CDO says that so far, CDOs have been under pressure to provide a return on investment quickly, which tends to lead to targeted remediation instead of long-term remediation and/or quality. 

But to achieve broader objectives, CDOs must have access to data from—and the authority to set governance—across the whole bank, not just specific business areas or geographies. The CDO of a major investment bank in India says there are greater benefits to be gained from working united as an organization rather than in isolation of a region or a country. “Of course, there would be people on the ground who would deal with the local regulators, but there is merit in having an overall policy for the entire organization that is implemented across the board,” the CDO says.

This is especially true for data-centric regulations such as Basel Committee of Banking. Supervision (BCBS) 239 or the General Data Protection Regulation (GDPR. “It is a punitive regulatory environment we are living in. Unless we achieve economies of scale and do a cookie-cutter model for the entire organization, it will not work. It’s about how to partner with each other within the organization in making these data-centric regulatory obligations easier. It’s across the board and not specific to a region or country,” the CDO of the Indian bank says, adding that most of her peers in India are focusing primarily on data quality instead of regulation, since better data quality produces higher-quality analytics. “The cost of bad data quality at this moment is equal to the US fiscal budget, which is about $4.3 trillion. So, there is definitely a business case to improve the data quality where it flows through the organization,” she says.

This means ensuring that each data item is understood in the same way throughout the whole organization. And that direction needs to come from the very top of an organization.

For example, at AXA, there is very clear understanding of the power of data and also how the data team can collaborate with the technology and compliance teams, for example, Ashok says. His team works closely with data privacy officer Maaike van Meer, who is also the chief legal and compliance officer at AXA Hong Kong, as well as with Darrell Ryman, chief information and technology officer at AXA Hong Kong. 

“To me, it’s more about the combination, because one team individually can’t do much. But when we combine and collaborate, I think the power of what comes out of the collaboration is very special,” he says. “It’s a three-way conversation, to make sure from my standpoint, how do we identify and use critical data from the business. And from the technology office, for the identified data elements, it is finding out where it is stored and how it is stored securely. Then, from a privacy angle, how do we make sure we have the right controls to make sure these critical data elements are protected properly? These three people need to work very closely for it to happen, and this is one good example of how collaboration makes something stronger than the individual parts.” 

The Road to CDO 2.0

The definition of a CDO is constantly evolving—from strategist and enforcer to facilitator and change-maker. A Bloomberg report titled CDO: A New and Evolving Role, found that while the role was originally created primarily to satisfy regulatory requirements, it has now evolved to include deriving value from data and monetizing that data for the business. 

IDC’s Daruwala says he believes that the CDO title will become a more strategic role, comparable to a chief strategy officer, and will become instrumental in a bank’s business.

“Some banks have ‘liberated’ data ownership to an enterprise level (where the bank—not a country, or a division, or a product team—owns the data). Here, the CDO’s role is pivotal. She or he can help the bank identify best practices in data monetization, and therein create more customer delight, or product personalization, or needs-based-selling. Some banks, however, view the role of a CDO as a peer to—or to complement—their chief marketing officer. Here, the CDO’s role is more of an inbound or outbound campaign manager, albeit with a degree of data analytics thrown in,” Daruwala says.

Bloomberg’s Foster says CDOs are at an equivalent level to all of the other C-level officers, with the power to make strategic decisions about their firms’ technical infrastructure and data architecture to grow the business faster. In fact, since the CDO is increasingly seen as the go-to person for building new solutions, meeting customer needs faster, and extracting business value from data to generate new sources of revenue—rather than merely satisfying regulatory data requirements—they are likely to gain an even more prominent seat at the C-suite table, he adds.