- Biggest challen...
Biggest challenges facing the financial sector when it comes to data management
By: Séamus Dunne
Over the past number of years, the financial sector has undergone a significant transformation. Tools such as artificial intelligence (AI), cloud computing and robotics have greatly impacted the way banks, insurance companies and technology players are delivering financial products to customers, and data is at the heart of it all. For organisations it is not only critical to have a data management system in place, but it is now a necessity to survive in a highly competitive market.
With a flood of technological change happening, the world is constantly having to evolve to keep up. Data has become an extremely valuable resource and it is important for all organisations in the financial sector to look at ways to manage this data correctly. Most organisations see data as a commodity and the last thing they want to do is lose or misuse it. The added value data has gained has led to an increased demand from both consumers and organisations. This is forcing the need for increased and improved data protection policies across all platforms, cloud applications and more. At the same time, there is calls for transparency regarding how data is collected and shared – this is where the concept of data management comes into play.
The financial sector has a lot of data at its fingertips, but the challenge is collating this data and making it work in a performant and auditable fashion. Everyday there is billions of transactions that take place and extracting valuable data from those transactions can be difficult. The biggest challenge lies in turning this vast amount of data into insightful data, although this can be time consuming, even the smallest detail can lead to a competitive advantage over competitors. Sorting through torrents of unstructured data for useful information is a substantial task which cannot be undervalued. To survive in a highly competitive market high-quality data analytics is required. Advanced analytics paired with good data management technology can help detect threats and uncover untapped opportunities thus leading to that competitive edge organisations thirst for. Big data provides multiple challenges for financial service providers as we have seen but it also provides timely opportunities such as valuable business insights. It is important to find the right data platform to allow for that.
The financial sector is accumulating data at an alarming rate which inevitably puts strain on the system. This has increased pressure on organisations to have a reliable data management system in place. As time passes, an organisations system will accumulate more data and thus more pressure. Having a functioning data management system is essential to eliminate the potential risk of downtime. Data management is a good way to counter act this problem but there are still other forces putting pressure on the financial sector; such as instantaneous responses, personal customer service and constant regulatory changes. Many believed that digital technology such as artificial intelligence and machine learning were going to help simplify the increased pressure, but we are still a long way away from fully reaping the benefits. As there is no new technology better placed to replace a well-run data-management platform, the options can be quite limited. One of those leading options is enterprise data management (EDM), it can centralise and organise data while making it accessible and useable. Implementing an intelligent EDM is a necessary component when handling increased pressure for any business.
Like many other sectors, the financial sector is becoming increasingly reliant on data and new technology developments which means there is a necessity to limit the dangers of cyber threats. The financial sector views cybersecurity as a top priority due to the countless problems it can cause. Year-on-year we see more and more data breaches involving financial service firms, so it is of paramount importance to incorporate innovative solutions to limit the damages caused by a breach. The financial sector has leaned heavily on Blockchain technology as it is deemed to be the next top end solution - an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value. Granted, it is very difficult to tamper with data stored on Blockchain, but it is also difficult to ensure the data stored has integrity. Enterprise data management can accurately and safely transfer data, but it is not one size fits all as every organisation has different needs. Organisations in the financial sector should prioritize this particularly as they deal with data privacy.
Data management is an integral part to any organisation as data is an extremely valuable resource and the importance of data management to the financial sector cannot be underestimated. Any organisation with an accessible and secure data management platform in place is in prime position to take advantage of an increasingly open landscape. Slowly but surely data analytics solutions are emerging which organisations need to take advantage of, and data management is a fundamental part of this process. The digital landscape has changed but expectation with employees, partners and customers has not. The financial sector is in a strong place as is reflective in the continued popularity of business and finance-related third-level courses. One thing is clear, the modern financial sector is and will continue to be powered by data.