The financial sector has always been subjected to regulatory compliance laws and directives. Consumers, lawmakers and politicians would expect no less.
But it's fair to say that the financial sector has witnessed a "hockey stick" trend regarding new regulations in recent years.
Last year I talked about how compliance is finally giving data quality the platform it deserves.
In that post, I wrote:
"Experienced data quality practitioners recognise that regulatory pressure not only gives them an executive mandate but the ability to create a platform and framework that will help satisfy or at least accelerate the deliverables for future compliance directives."
My point is that you shouldn't be creating data quality management centres of excellence and other capabilities just to satisfy a policy (no matter how important it is!). You should, instead, be striving to ensure the adoption of consistent data management practices that will enable your organization to maximise business value. And it's that driver of business that I believe is all too often being left behind in the quest to simply be compliant.
A reactionary approach
Teams are being created just to meet the demands of compliance. And when the project is finished, they’re quietly disbanded.
In my experience, many large organisations fail to take the opposite path – the proactive approach to regulatory compliance.You see the symptom of this at organizations where HR teams desperately try to source candidates for compliance-specific teams and business units.
But doesn’t a compliance-centric approach make sense? If we're tackling BCBS239 then why not set up a BCBS239 team? If we’re struggling with Solvency II, then let’s build a team around that.
The problem comes when these projects create new islands of data management practices, isolated from one another by different techniques, tools and standards.
At one organisation, while consulting on a short-term compliance assignment, I discovered another data quality team working not twenty feet away from our team. They were using an entirely different tool set and framework.
This reactionary tactic is not uncommon. And it leads to considerable waste – particularly at a time when speed and quality of delivery are paramount for firms that need to meet deadlines for regulatory compliance.
In the past, it's fair to say that regulators often lacked the equivalent capability of the modern, data-driven enterprise. They lacked the advanced technologies the banks were using and just couldn't scale to cope with the demands of processing so much data.
But in recent years, regulators have also had to step up their game and deploy sophisticated data management solutions with highly qualified staff to oversee the complex processes involved. I keep running into these folks at roundtables and events, during my webinars and roadshows. They're switched on. And executives need to be mindful that the game has changed.
Think smart, be proactive
It's clear that teams can't "wing it" with compliance any more. The sheer volume, variety and velocity of regulatory change hitting organizations is too high.
But creating more and more project-specific teams is not the answer. You don't need more silos; you need more cooperation and collaboration. Because guess what? That data quality analyst you just hired to check BCBS239 aggregation rules is equally capable of building lineage paths on your critical information chains so that you can start to optimise data quality and drive real worth across the value chain.
It's time to think smart and look holistically at how you can build mature capabilities that cope proactively with regulatory change. The alternative is reactive, manual, labour-intensive spreadsheet hacks – and a regulator who is looking for so much more.