The first panel of the day opened with an introductory talk by Chris Johnson of HSBC. Chris started his talk by proudly announcing that he drives a Skoda car, something that to him would have been unthinkable 25 years ago but with investment, process and standards things can and will change. He suggested that data management needs to go through a similar transformation, but that there remained a lot to be done.
Moving on to the current hot topics of data unitilities and managed services, he said that reduced costs of managed services only became apparent in the long term and that both types of initiative have historically faced issues with:
- Logistical Challenges and Risks
Chris made the very good point that until service providers accept liability for data quality then this means that clients must always check the data they use. He also mentioned that in relation to Solvency II (a hot topic for Chris at HSBC Security Services), that EIOPA had recently mentioned that managed services may need to be regulated. Chris mentioned the lack of time available to respond to all the various regulatory deadlines faced (a recurring theme) and that the industry still lacked some basic fundamentals such as a standard instrument identifier.
Chris then joined the panel discussion with Andrew Delaney as moderator and with other panelists including Colin Gibson (see previous post), Matt Cox of Denver Perry, Sally Hinds of Data Management Consultancy Services and Robert Hofstetter of Bank J. Safra Sarasin. The key points I took from the panel are outlined below:
- Sally said that many firms were around Level 3 in the Data Management Maturity Model, and that many were struggling particularly with data integration. Sally added that utililities were new, as was the CDO role and that implications for data management were only just playing out.
- Matt thought that reducing cost was an obvious priority in the industry at the moment, with offshoring playing its part but progress was slow. He believed that data management remains underdeveloped with much more to be done.
- Colin said that organisations remain daunted by their data management challenges and said that new challenges for data management with transactional data and derived data.
- Sally emphasised the role of the US FATCA regulation and how it touches upon some many processess and departments including KYC, AML, Legal, Tax etc.
- Matt highlighted derivatives regulation with the current activity in central clearing, Dodd-Frank, Basel III and EMIR.
- Chris picked up on this and added Solvency II into the mix (I think you can sense regulation was a key theme…). He expressed the need and desirability of a Unique Product Identifier (UPI see report) as essential for the financial markets industry and how we need not just stand still now the LEI was coming. He said that industry associations really needed to pick up their game to get more standards in place but added that the IMA had been quite proactive in this regard. He expressed his frustration at current data licensing arrangements with data vendors, with the insistence on a single point of use being the main issue (big problem if you are in security services serving your clients I guess)
- Robert added that his main issues were data costs and data quality
- Andrew then brought the topic around to risk management and its impact on data management.
- Colin suggested that more effort was needed to understand the data needs of end users within risk management. He also mentioned that products are not all standard and data complexity presents problems that need addressing in data management.
- Chris mentioned that there 30 data fields used in Solvency II calculations and that if any are wrong this would have a direct impact on the calcualated capital charge (i.e. data is important!)
- Colin got onto the topic of unstructured data and said how it needed to be tagged in some way to become useful. He suggested that there was an embrionic cross-over taking place between structured and unstructured data usage.
- Sally thought that the merging of Business Intelligence into Data Management was a key development, and that if you have clean data then use it as much as you can.
- Robert thought that increased complexity in risk management and elsewhere should drive the need for increased automation.
- Colin thought cost pressures mean that the industry simply cannot afford the old IT infrastructure and that architecture needs to be completely rethought.
- Chris said that we all need to get the basics right, with LEI but then on to UPI. He said to his knowledge data management will always be a cost centre and standardisation was a key element of reducing costs across the industry.
- Sally thought that governance and ownership of data was wooly at many organisations and needed more work. She added this needed senior sponsorship and that data management was an ongoing process, not a one-off project.
- Matt said that the "stick" was very much needed in addition to the carrot, advising that the proponents of improved data management should very much lay out the negative consequences to bring home the reality to business users who might not see the immediate benefits and costs.
Overall good panel, lots of good debate and exchanging of ideas.