Charles Southwood, Regional VP – Northern Europe and MEA at Denodo
In recent years, the financial services (FS) sector has witnessed a boom in digital transformation. In addition to emerging technologies, the popularity of challenger banks and fintech unicorns have resulted in a wave of innovation. This evolution has made the industry more agile and efficient than ever before.
Today, almost every interaction, action and reaction produces a digital footprint. Information about customers and employees – no matter how personal or sensitive – will come in the form of data. If utilised correctly, this data has the power to unlock enormous potential for financial institutions. Data-driven insights can help personalise interactions, improve the customer experience, and increase brand loyalty. Internally, they can be used to inform processes and shape wider business strategies.
However, before FS organisations can reap the benefits of data, there is one significant hurdle they must overcome.
Hard to understand, harder to achieve
Whilst having always been a key concern for those operating within the finance sector, both compliance and data governance have become significantly more challenging in the digital age.
Often feeling like a legal mind-field for those trying to successfully navigate them, there are many hidden complications and confusing clauses – all of which are mandatory. So, while ensuring compliance has never been more important, it has also never been harder to achieve.
Due to the type of data that financial organisations hold, they are under the heaviest of scrutiny when it comes to both governance and compliance. But, whether its potential financial fraud or money laundering, risk comes in many forms.
As a result, even the most cited and well-publicised legislations are not always met. For example, when the General Data Protection Regulation (GDPR) came into force, despite the buildup and risk of hefty fines, some organisations still weren’t ready. This remains two-years later, with tech giants Oracle and Salesforce among the latest to be hit with GDPR class action lawsuits over cookie tracking consent.
An always-evolving landscape
If businesses are still, to this day, struggling to comply with one of the most talked-about regulations in recent years, how can they expect to keep up with the others? Especially when the regulatory landscape is constantly changing. Between 2008 and 2016, there was a 500% increase in regulatory changes in developed markets.
Since then, things haven’t slowed down. The Markets in Financial Instruments Directive (MiFID II), requirements for central clearing, and the second Payment Service Directive (PSD2) are just a few examples of the most recent regulations causing headaches. With some predictions estimating a new regulatory update is now being issued every seven minutes, it’s easy to see how organisations could find themselves on the wrong side of the compliance track.
Keeping a handle on all that data
Complying with ever-changing regulations is only made more difficult by the fact that the data that FS organisations hold is often complex and of poor quality. Structured and unstructured, it is stored in many different places – whether that’s in data lakes, on premise or in multi-cloud environments – making it very difficult to ensure compliance.
This is where modern technologies such as data virtualisation come in. Through providing a single, logical view of all data throughout an entire organisation – no matter where it resides or what format it is in – data virtualisation ensures that organisations can gain the upper hand, even when the data they store continues to grow. High visibility of information makes it easier to ensure that any regulations relating to that information are being met. After all, how can you control something if you do not know where it is, or that it even exists?
In addition to this, a longer-term benefit of data virtualisation is that it makes a business substantially more agile. This is because it enables the application of governance rules and personal data audits. Operators can easily select who has access to what information within the wider organisation. Once set up, they can alter settings for sharing, de-silo-ing, masking and filtering through defined, role-based data access. In terms of governance, this feature is essential, ensuring that only those who have the correct permissions to access sensitive information are able to.
The potential financial consequences and long-standing reputational damage associated with non-compliance could be the difference between a FS business surviving and collapsing in today’s climate. Whilst some companies may think they are ahead of the game now, that could all change with the introduction of a new regulation. The best way to ensure compliance tomorrow is to know your data today. Through providing total visibility, data virtualisation can help FS instutitions to prepare for whatever is next on the compliance horizon.