Panel: Greater Regulatory Awareness Needed for Firms to Respond to Data Challenges

Project prioritization is becoming increasingly important in data management, as firms try to balance the need to adapt to regulatory changes and meet ongoing business requirements for tackling operational data challenges, according to panelists at a seminar organized by regulatory think-tank JWG in December.

Speakers said firms must ensure there is broad awareness of regulatory requirements internally, particularly in terms of how planned changes will impact data management practices and how the business can react to the changes.

London-based Mark Davies, head of group finance reference data, RBS Shared Services Finance and speaker at the event, said having two or three people in isolation that understand change from a regulatory point of view, and all the different requirements that are coming through, will not be enough for organizations. “Every regulation is going to have an impact on different parts of a firm, raising visibility and awareness internally is important,” said Davies.

“We are actively seeking to improve the way we react to the scale of change and regulation currently in the pipeline,” he said. We are not looking to act in an isolated way, but instead to ensure we proceed in a structured and centralized manner, avoiding individual silos of reporting.

Speakers argued few firms are likely to be ready to tackle the regulatory challenges they may face in the near future, and that having a picture of what the global regulatory view looks like now is essential.

Part of tackling regulatory change will involve firms going back to basics in their data practices. London-based Christopher Bannocks*, managing director, global head of reference data, operations, Nomura International, said firms have to ensure they start with the basic principles: how they are going to govern and control the data, how they are going to workflow that data through the organization while keeping it clean, and making sure that in the case of an acquisition, the data integration rules are clear and the principles and policies that exist within workflow are also applied to data migrations.

“I think if we make sure it is a clear driver for our organizations in terms of how we build and strategize and deploy resources, we might be able to get this right...It’s about getting data quality controls, governance, standards in place and driving your technology strategy from there,” he said.

However, the increasing focus on regulatory changes may hinder program developments, with some firms postponing business-driven projects to prioritize regulatory-driven initiatives.

RBS’s Davies said: “When there is regulation driving change, it is much easier to sell the story and secure the necessary funding... issues tend to be in the non-regulatory driven space,” he said, adding that in some cases initiatives that would be beneficial to the organization can drop in priority without a regulatory drive.

Accuracy

UK-based Colin Rickard, managing director, north and west Europe, DataFlux, said: “If you are going to meet a wide range of the forthcoming regulations, you have to start measuring and proving that your data is substantially accurate and complete.”

According to Rickard, firms should be looking to benchmark data in terms of quality as it moves through their organizations—whether it be by integrating systems or setting up rules and monitoring, as well as looking at data governance strategies.

“A lot of firms are not being strategic enough when it comes to tackling these challenges,” he said.

Davies said: “We are looking to build confidence in the information we have for our internal risk management, as well as continuing to ensure the information we report is accurate, timely, up to date and well maintained,” adding that one of the major challenges remains “being able to show that the information being used both in the risk and finance functions is consistent.”

But while discussions around regulatory change in data management are ongoing, one of the speakers highlighted that many firms are still struggling to overcome cultural changes to solve the data challenges they face, including data ownership and management. While the appointing of a chief data officer may represent a step in the right direction, basic concepts have to be agreed beforehand.

“If firms are able to change the assignment of data ownership to the business, they would manage to solve a lot of issues, not only creating new data infrastructures but actually cleaning up the data that exists,” said one of the speakers.

Investing in these types of changes would perhaps have been easier if firms could free-up resources from regulatory-driven projects.

Panelists said the timeframe around regulatory change is one of the missing components at the moment, making it difficult to assess the potential impact of new regulation. Firms have to understand when regulation is going to hit them and when they need to respond to be able to plan and budget, but in many cases, this information is not even available.

It would have been easier if firms knew which regulation was going to be implemented first. Nomura’s Bannocks said: “Regulatory changes may look vast, but the question remains how quickly is each regulation going to impact them and how much impact will each have?” he said.

* Comments reproduced here by Christopher Bannocks are his own views, and not necessarily representative of those of Nomura