“As business processes become more automated, data quality becomes the rate-limiting factor”. Put simply, if you put garbage in, you get garbage out. Gartner
If we look back on our previous Future Focus Report surveys over the past four years, the priority for corporate, trust and funds services firms has been on transforming their businesses by digitalising regulatory compliance, automating workflow processes and improving digital client engagement.
However, what we are now finding is that the issue of data quality is now holding firms back. A quote from Gartner summarises this well – “As business processes become more automated, data quality becomes the rate-limiting factor”. Put simply, if you put garbage in, you get garbage out.
Our latest Future Focus Report has found that data quality has now rocketed up the agenda, named in this year’s survey as the top business challenge facing firms, ahead of increasing efficiencies and reducing costs, and regulatory burden. Two out of three firms surveyed now say that improving data quality is a top priority for 2024.
The importance of data integrity
Corporate, trust and funds services providers need to have confidence that the data they hold is accurate and consistent over the entire data lifecycle. This is vital because firms will be making important decisions based on this data.
Unfortunately for the industry, there is still some way to go, with our survey finding that firms only scored the quality of their data at just 6 out of 10 and only 41% of firms have put in place a consistent operating model to manage data.
Maintaining data integrity is crucial for reporting both to clients and the regulator. Our survey found that 86% of firms expect digital engagement with end-clients to become much more commonplace, however if firms don’t have confidence in the integrity of their data, they will be nervous about giving clients more digital access to this data via client portals. Regulators also take a very dismal view of firms which have incomplete or out-of-date data and which lack processes to maintain data integrity.
Improving data quality
For data quality, this is around measuring the condition of the data based on a number of factors like accuracy, completeness and reliability. The questions firms should be asking themselves are: is my data accurate and free from errors? Is the data complete and present without any gaps? Does it remain consistent over time? Do we have the feedback loops in place in the organisation for users to raise concerns about the quality of the data in certain areas? These are key questions that the regulator will also want answers to.
To improve data quality, the importance of the people-factor is key. Firms need to foster a training and culture environment and prep staff with the necessary skills to be able to handle data responsibly, because no system, tool or process alone can guarantee data governance – it's the people behind these tools who make a difference.
In tandem with this, there needs to be a shared responsibility for data across the business, at all levels from entry-level to senior management. Everyone has their part to play in ensuring data quality.
When an organisation invests in both training and nurturing a data-aware culture, it's not only safeguarding its data but also unlocking the true potential of that data. Having accurate, timely and easily accessible data is the foundation on which future digitisation can be built.
The threats from inaccurate data
In a world where decisions are increasingly data-driven, even a minor data inaccuracy can lead to major mishaps. And failure to remediate data could be the first domino in a chain reaction.
In financial services, we’ve seen some major scandals. Many people will remember the “London Whale” scandal which cost JP Morgan $920 million in penalties due to an error in a spreadsheet calculating a value-at-risk model. Citigroup was fined $400 million due to the regulator finding gaps in the bank's ability to be able to get out and surface the data it requested.
Data is an invaluable asset
In our digital age, data isn't just numbers or facts, it's an invaluable asset that when harnessed correctly can propel a business to new heights. And every decision that we make around data, from collection, analysis to action, is going to directly feed into the financial health of the company, be it in cost savings, revenue generation or risk mitigation.
It's clear from our surveys that the corporate, trust and fund services sector wants to embrace digitalisation and realise the full benefits to margins, profitability, enterprise value and client service that digitalisation and automation bring. To do this, firms need to start with their most valuable asset in the digital age – their data.
In an increasingly competitive and regulated industry, administration software provides trust companies a significant advantage, allowing focus on core competencies and the time to provide exceptional services to clients.
If you'd like to talk about your specific challenges why not book an introductory call with one of the team.