One of the most critical first steps for financial services firms looking to implement multidomain master data management (MDM) is to quantify the cost savings they could achieve.
Unfortunately, a thorough analysis of potential ROI is also one of the steps least followed (a key culprit being disconnects between business and IT).
This shortcoming is spotlighted in a new Informatica white paper, “Five Steps to Managing Reference Data More Effectively in Investment Banking,” which outlines key questions to ask in sizing up the cost implications of bad data and antiquated systems, such as:
- How long does it take to introduce a new security to trade?
- How many settlements need to be fixed manually?
- How many redundant data feeds does your firm have to manage?
- How accurate and complete are your end-of-day reports?
- Do you have the data you need to minimize risk and exposure?
Too often, the high costs of bad reference data are obscured by the furious pace and complexity of financial markets. But in today’s low growth environment, we’re seeing more firms cast a critical eye on data-related cost implications, starting with a back-of-the-napkin exercise and progressing to a thorough, well conceived business case and ROI measurement framework.
Those that do embark on the MDM journey are reaping some terrific rewards, such as a large U.K.-based investment bank that needed to improve its counterparty risk management and optimize capital reserves. This firm used MDM to improve its straight-through processing rate by 50 percent and:
- Realized a one-time $12.5 million reduction in IT capital expenses by replacing an antiquated system
- Is saving $2 million a year by reducing the number of failed trades that had to be fixed manually
- Reduced by $50 million the cost of capital due to increased liquidity resulting from fewer “stuck” trades
How much could your firm save? Get your white paper for a look at how leading institutions are using MDM to better manage risk and compliance, optimize capital reserves, automate key processes, improve operations and analytics and strengthen control and confidence—with quantifiable bottom-line benefits. See our previous blog post on using MDM to enable Basel II compliance.