Author: Sharad Varshney, CEO of OvalEdge
Data governance has the power to transform organizations across all industries. However, one of the most important sectors where data governance has, and continues to have, a huge impact is finance.
In fact, one of the fundamental tenets of data governance, compliance, grew out of regulations developed by the banking industry. Today, data governance is still essential in the financial sector.
1. Support regulatory compliance
Compliance is perhaps the most important benefit of data governance for financial institutions. As finance professionals know, maintaining strict data privacy and responsible banking regulations can be a full-time job.
Securing customer data is the cornerstone of compliance, and data governance simplifies that responsibility. Data governance policies are enforced through automated data governance tools.
Essentially, a data governance tool will scan all of your data sources for PII and other confidential data. Once found, this data is flagged and cataloged. When you know where your sensitive data is, you can monitor its use and determine who can access it.
2. Reduce costs in your organization
Manually managing data in your organization is not only slow and inefficient, it’s expensive. Usually, the responsibility for data management is given to IT teams. And maintaining an active IT team comes with significant costs.
When IT pros are tasked with finding data, manually granting access to data, and ensuring security, they can’t focus on other tasks. In many cases, these tasks involve streamlining processes, improving infrastructure, and ensuring that organizations stay ahead, technically, of the competition.
Data governance processes relieve IT teams of this burden and centralize technologies, eliminating the need for multiple costly third-party systems. These savings are primarily achieved through the provision of self-service, where users have a secure method to find and access data for analysis.
3. Provide market information
The financial sector is becoming increasingly competitive. Today, traditional institutions are clashing with innovative alternatives focused on digital finance, while new entrants face a heavily saturated market.
Financial organizations must turn to market insights to gain a competitive edge. Data analytics is the most effective way to get this insight, and data governance enables cross-enterprise analysis.
Data governance processes ensure that data is easily accessible and well organized. Essentially ready for analysis. Although identifying market trends is primarily the role of management teams, anyone in an organization can use business data to innovate.
4. Ensure data quality
Even if data access and analytics thrive in an organization, the data used in analytics is useless unless it is of high quality. When data is compromised, it cannot provide you with the essential precision required to create meaningful reports.
In the financial sector, this is essential. Without ensuring the integrity of financial reports and forecasts, you cannot use the data in your custody. Why? Because the fallout from inaccurate reporting can be very costly and potentially expose your organization to legal action.
Data governance enables you to measure, assess, and resolve data quality issues. Using a data governance tool, you can automate data quality protocols and data lineage tracking. Beyond that, you can introduce procedures that ensure data quality is managed in every part of your organization.
5. Introduce a data-driven culture
Ultimately, for you to achieve the level of innovation supported by data analytics, you need to implement a cultural change in your organization. Across industries, data has the potential to transform the way companies do business.
However, in finance, data innovations provide a much-needed competitive advantage and gaining the edge with data insights is critical to success. Not only can you use data to determine where businesses can find savings and streamline processes, but you can also gather critical customer insights that drive your business direction based on tangible forecasts.
Data governance ensures that this information is accessible, secure and easy to analyze. Essentially, data governance provisions ensure that data-driven innovation is not only encouraged but supported. In short, data governance facilitates a data-driven culture in your business. And, when verifiable data is at the heart of all business decisions, you can rest assured that it’s both accurate and smart.
There is no single use case for data governance in finance that trumps the rest. Data governance is comprehensive, connected and ultimately a comprehensive approach. When it comes to implementation, it’s best to observe and measure success collectively, incorporating all of your pain points and reflecting on how your governance initiative addressed or overcome them.
Moreover, data governance is a continuous, organic and fluid process. This means that your data governance strategy will also evolve with your business. It is not a rigid business practice and can be adapted to external and internal circumstances.
For example, suppose you decide to take a remote recruiting approach. In this case, you can modify your data governance processes to ensure that the various new data sources are validated and secure. Or, if market conditions force you to re-evaluate your business model, you may decide to remove data access from certain services. At the same time, you can rework your data strategy at the C-suite level.