Lately we’ve been spending a fair amount of time talking to banks and investment firms about their information management challenges. One industry insider recently summed it all up for me by stating that organizations in this industry are motivated by one of two things – fear or greed. It might sound a bit crass, but that’s not a bad thing and I think it reflects the reality of the market we all, not just banks and investment firms, operate in.
But sticking with financial services for a moment, this declaration rings especially true. The financial crisis served to really highlight how greed ultimately led to that event. All for-profit organizations are motivated to sell more, earn more, profit more, which – in theory anyway – helps employees and the economy. But unchecked, consumers suffered and ultimately so did the banks and employees who lost their jobs as a result, not to mention the far-reaching consequences on the economy. In response, the regulations came out in force and now the industry is scrutinized like few others, and substantial penalties await those who run afoul of reporting requirements, or cannot document sufficient capital reserves, etc. And it is likely not over, as lawmakers continue to call for further regulations and existing regulations become more defined, structured and deployed.
What does this have to do with information management? Well, everything.
Data and information is at the root of being able to feed your appetite for growth and profit, and is the first line of defense against the penalties associated with regulatory non-compliance. Data and information is also at the core of understanding risk exposure as you grow and comply. Other examples where better information management is needed:
- You can’t grow your retail banking customer base if you cannot properly identify new customers or segment existing customers , which will prevent you from executing effective marketing campaign offers for “first-sell,” up-sell and cross-sell opportunities.
- You may be subject to significant penalties if you are unable to comply with a regulation that requires strict documentation of your ability to remain solvent or demonstrate adequate capital reserves to cover operational risk exposure, as well as the demand for increased detail in some regulations that require customer-level information
- Retaining customers and working with consultants may be dependent on adequate analytics and reporting of investment results for investment management firms.
- Mortgage originators and servicers need to access customer information, analyze it, and respond nearly instantaneously to respond with profitable loan offers in order to win consumer business
- Leveraging emerging industry standard reference data inside your operational systems can impede your ability to grow and comply if you are unable to associate entities across systems and in relation to the industry identifiers, for purposes of KYC, anti-money laundering, etc.
And this is just a partial list. There are many more areas where better information management is necessary. Why better? Because today’s approaches don’t cut it. If they did, we may not have experienced the issues observed in the recent past at financial services firms. Things change too quickly, more data is being generated, firms are consolidating as well as growing, customers expect firms to know more about them – this all feeds into the need for a more agile, more automated, more comprehensive, easier to change information management infrastructure.
You can read more about key issues in financial services on our website, as well as additional information on the benefits of a more agile and automated information management infrastructure and why it is the next best action for IT to take to support the firm’s business goals.
If you’re ready to discuss how Kalido can enable better information management for your firm or bank, please contact us.