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“Every time I ask for a report or piece of information I get the same response – ‘We don’t have the data!’”
This was the beginning of a five-minute rant by the CEO of an $80 billion bank. “Data” had become the root cause of all problems. Of course, they had the data. The real problem was a complex matrix of issues that included an inability to access data. These issues included: not knowing where the data was located, uncertainty over its definitions, multiple versions of it being stored, and a general confusion over what data was required. Cumbersome analytic tools for using the data also added to the problem.
Interestingly, this rant precipitated a facilitated, roundtable discussion among the executive management, technology, and risk management teams. The ground rules were simple: No “ganging up” on technology.
The discussion was spirited and very pointed. After the half-day session, everyone in the room realized that each of them had significantly contributed to the root of the problem. The fascinating realization by executive management was that a lack of understanding about basic data management technologies had created a glue that bound the issues into a complex conundrum. Their pressure for instant answers, coupled with a lack of basic data infrastructure funding, resulted in a COBOL and SQL spaghetti-like mess. Critical data resided in excel spreadsheets in a form that was not auditable, competing business rules, data definitions and reporting tools had been jury-rigged to provide answers. In short, they had caused complex confusion.
Weeks passed, and as I continued working with the client, I was intrigued to hear the Chief Credit Officer explaining reference data to the Senior Risk Officer. Now that’s not an everyday event! Then there was the CFO and General Auditor agreeing that better meta data could be a useful tool to tackle the transparency issue which the Audit Committee of the Board badly needed.
All of us have been in the middle of these complex puzzles, and probably not all of us fared as well as the management in this example. But the lesson to be learned is universal. The more a management team understands the complexity of large-scale data management and reporting, the more likely that enterprise data management will surface as a major management area for the institution. Better funding for the enterprise data management will follow its improved results.
With aggressive competition, demanding stockholders, uncompromising regulators, and ever-active legislators, data has become the lifeblood of all financial institutions. Rapid access to and analysis of data becomes one of the enterprise’s primary competitive weapons. When I started my career in banking in the late 1960s, data management was simple. The focus was on data entry, most likely related to loans, deposits and keeping them in balance. All reports were standardized by major applications. We were defined by punch cards. There was no ad hoc reporting. No one used laptops. Data mismanagement had not risen to the heights of executive exasperation. In short, the amount of information required to run a big bank was basic. (Or maybe it was a huge case of “ignorance is bliss”).
The simplicity of the past is gone forever. Today’s world is data dependent and, within an increasing number of institutions, “data” has become a four-letter word shouted in frustration throughout the halls.