Chief Data Officer now a must for Financial Services

01 June 2015 3 min. read

The need for businesses to engage with Big Data and deal with compliance issues within fields strewn with data has risen starkly over the past decade. However, without clear leadership in both areas, information management often remains fragmented, and thereby introduces the risk of not complying or missing valuable insights. To combat this, the Chief Data Officer may come to have a must-have role within organisations, research by Capgemini and Efma shows.

With increasing levels of digitalisation, and with financial firms needing to collect and control more and more information for regulatory and strategic reasons, the role of data has in recent years become a strategic necessity for financial organisations. With the positive value brought out by careful information management purported to boost returns in operational efficiency, risk and price management, customer experience and identifying new business models.

Big data opportunities in Financial Services Sector

In a recent report from Capgemini and Efma, titled ‘Stewarding Data: Why Financial Services Firms Need a Chief Data Officer’, the value of Big Data and of Chief Data Officers (CDOs) to businesses, is explored, with CDOs playing a role in both compliance as the exploitation of Big Data.

Role in compliance and Big Data
The cost for not engaging with the compliance issues relating to digital information transfers can be considerable. Between 2008 and 2013, banks in the US paid more than $100 billion in penalties and settlements. As more and more legislation is introduced that requires at least some level of data management, or information that in many organisations is siloed, compliance can be an issue, with 54% of surveyed companies surveyed not having robust processes to manage data quality.

Impact of Big Data on Financial Services sector

Capgemini finds that engaging with Big Data is too seen as an increasingly critical issue for businesses, with 79% of Financial Services executives believing that the ability to extract value from Big Data is an important factor in their future success. Three out of four (75%) even say that not leveraging Big Data can lead to becoming uncompetitive, with a 57% feeling the heat from data exploiting start-ups.

One of the key challenges for Big Data implementation, as cited by 50% of executive surveyed, is the ineffective coordination of Big Data analytics teams hampering the leveraging of business decision relevant information. Almost half (48%) of Financial Services teams are operating with scattered analytics teams operating independently and without central oversight or vision.

Effective management of information is key particularly to the success of Big Data initiatives, as is shown by the research. 43% of companies with a CDO running Big Data analytics within an organisation garnered considerably improved performance rates in the success of their Big Data initiatives, compared to 31% for organisations that lacked such an officer.

CDO appointments by industry sector

CDO in practice
While the value of the CDO to an organisation is justifiable in improved compliance and data analytics, the uptake of CDO roles within organisations still remains relatively low. Only 16% of Financial Services players now have an active CDO, while 15% of Oil & Gas suppliers having such a role and 14% of Engineering firms. The role of CDO is the least pronounced in the Utilities sector at 7%, followed by Media and Public Services, both at 9%.

To meet compliance and data management standards, and to exploit the information contained in the Big Data caches that many financial services companies live with, the role of CDO can be invaluable in dealing with both areas – by overseeing siloed information and bringing together analytics capacities. However, the report too notes that often CDOs will be given either a role in data management or in data analytics (process oriented or value oriented CDOs) – where a mandate to run both functional areas may be more effective.