FIMA: Data governance ‘vital’ for regulation
30 August 2016 London
Image: Shutterstock
Data governance is ‘vital’, particularly with regards to risk management and regulation, according to a survey of data managers by the Financial Information Management conference and GoldenSource.
The survey report, A Snapshot of Challenges in Financial Data Management, noted that financial data managers are facing challenges such as the implementation of the Markets in Financial Instruments Directive (MiFID) II, and increasing transparency and efficiency requirements.
Only 17 percent of respondents considered data governance a “nice to have”, and second to other priorities in the business, while the other 83 percent said they consider data governance “vital due to the level of fines from the regulator”.
Risk management was found to be the most important factor in data governance, highlighted by 56 percent. This was followed by data quality, noted as important by 38 percent, and data management highlighted by 35 percent.
When asked how much they plan to invest in improving data governance in the next 12 to 18 months, more than half, 51 percent, of respondents said they will spend £10 million or more. This is an increase compared to last year’s survey, in which 41 percent said they planned on spending £10 million or more in the same upcoming time period.
However, the percentage of respondents planning on spending more than £15 million dropped from 30 percent to 24 percent, while those planning on spending £10 million to £15 million increased significantly from 11 percent to 27 percent.
The number of respondents saying they plan to spend less than £5 million dropped significantly from 40 percent in 2015 to 17 percent in 2016, while those planning on spending between £5 million and £10 million increased from 18 percent to 32 percent.
The top priority in respondents’ data management strategies emerged as regulatory and compliance requirements, noted as a priority by 68 percent. Regulatory issues were also the top priority last year, highlighted by 80 percent.
For 2016, the second most popular priority was improving data quality, cited by 65 percent, compared to 50 percent in 2015.
Tom Stock, senior vice president of product management at GoldenSource Corporation, said: “It doesn’t surprise me that data quality is a growing strategic focus. Most of the other categories are enabled by data quality.”
He added: “System automation, the biggest climber in the benchmark, is a key element of a mature data management capability. It clearly states the intention of the industry to shift up a gear.”
When addressing regulatory challenges, 46 percent of respondents said their company has fully integrated systems and tools to manage regulation. While 30 percent said they have a shared data pool resource paired with individual software and reporting tools, 24 percent said they have completely separate systems for each regulation.
Unsurprisingly, MiFID II, which is coming into effect in January 2018, was named as the most significant regulation at the moment by 41 percent.
The Basel Committee on Banking Supervision regulation 239 was the number one regulation for 23 percent, followed by 12 percent that said they are focused on Dodd-Frank and 11 percent focused on FATCA.
Finally, When meeting data vendor compliance requirements, 38 percent of respondents said their biggest challenge is managing the cost of complying with data vendor contracts. A further 20 percent said the biggest challenge is keeping up with changes in the contracts, and 18 percent said it is understanding the ‘nuances’ of the contract.
Stuart Smith, vice president of professional services for GoldenSource Corporation, said: “Everyone has challenges with managing vendor data and its related contracts. It’s part of life in the data management world.”
“Ensuring that data, once it has been downloaded, is used and re-used to get maximum value from it is something that is within the grasp of every firm. At the least this will achieve clarity as to who is using the data and where cross-charges should be applied.”
The study was conducted throughout May and June this year, and included 100 reference data professionals from Europe and North America.
The survey report, A Snapshot of Challenges in Financial Data Management, noted that financial data managers are facing challenges such as the implementation of the Markets in Financial Instruments Directive (MiFID) II, and increasing transparency and efficiency requirements.
Only 17 percent of respondents considered data governance a “nice to have”, and second to other priorities in the business, while the other 83 percent said they consider data governance “vital due to the level of fines from the regulator”.
Risk management was found to be the most important factor in data governance, highlighted by 56 percent. This was followed by data quality, noted as important by 38 percent, and data management highlighted by 35 percent.
When asked how much they plan to invest in improving data governance in the next 12 to 18 months, more than half, 51 percent, of respondents said they will spend £10 million or more. This is an increase compared to last year’s survey, in which 41 percent said they planned on spending £10 million or more in the same upcoming time period.
However, the percentage of respondents planning on spending more than £15 million dropped from 30 percent to 24 percent, while those planning on spending £10 million to £15 million increased significantly from 11 percent to 27 percent.
The number of respondents saying they plan to spend less than £5 million dropped significantly from 40 percent in 2015 to 17 percent in 2016, while those planning on spending between £5 million and £10 million increased from 18 percent to 32 percent.
The top priority in respondents’ data management strategies emerged as regulatory and compliance requirements, noted as a priority by 68 percent. Regulatory issues were also the top priority last year, highlighted by 80 percent.
For 2016, the second most popular priority was improving data quality, cited by 65 percent, compared to 50 percent in 2015.
Tom Stock, senior vice president of product management at GoldenSource Corporation, said: “It doesn’t surprise me that data quality is a growing strategic focus. Most of the other categories are enabled by data quality.”
He added: “System automation, the biggest climber in the benchmark, is a key element of a mature data management capability. It clearly states the intention of the industry to shift up a gear.”
When addressing regulatory challenges, 46 percent of respondents said their company has fully integrated systems and tools to manage regulation. While 30 percent said they have a shared data pool resource paired with individual software and reporting tools, 24 percent said they have completely separate systems for each regulation.
Unsurprisingly, MiFID II, which is coming into effect in January 2018, was named as the most significant regulation at the moment by 41 percent.
The Basel Committee on Banking Supervision regulation 239 was the number one regulation for 23 percent, followed by 12 percent that said they are focused on Dodd-Frank and 11 percent focused on FATCA.
Finally, When meeting data vendor compliance requirements, 38 percent of respondents said their biggest challenge is managing the cost of complying with data vendor contracts. A further 20 percent said the biggest challenge is keeping up with changes in the contracts, and 18 percent said it is understanding the ‘nuances’ of the contract.
Stuart Smith, vice president of professional services for GoldenSource Corporation, said: “Everyone has challenges with managing vendor data and its related contracts. It’s part of life in the data management world.”
“Ensuring that data, once it has been downloaded, is used and re-used to get maximum value from it is something that is within the grasp of every firm. At the least this will achieve clarity as to who is using the data and where cross-charges should be applied.”
The study was conducted throughout May and June this year, and included 100 reference data professionals from Europe and North America.
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