Chief Data Officers: A Financial Services Perspective

In my last blog, I wrote about the challenges and opportunities for the four archetypes of data leadership identified in IDC’s state of the chief data officer (CDO) survey [1] commissioned by Informatica. In this blog, I will look at the priorities and challenges reported by chief data officers in the financial services industry. The accelerating pace of change requires financial services organizations to leverage data as a strategic asset to improve customer experience, increase wallet share, operationalize data governance, combat fraud, and increase regulatory compliance. But 87% of respondents reported difficulty with data, including availability, accessibility, and quality.

Sixty-five percent of CDOs in financial services are prioritizing improvement of omnichannel customer experience across business silos and touchpoints from mobile devices to traditional call centers. To achieve these goals, they are upgrading legacy business applications with more modern cloud-based solutions, and 68% are prioritizing automation and optimization of customer-facing processes. However, 60% reported significant difficulty mapping, transforming, and cleansing master data as part of their migration to SaaS applications. This impacts their ability to modernize their infrastructure, increase process efficiency, and create frictionless experiences. In an example of how to achieve these goals, Informatica helped insurance company Santalucía Seguros personalize customer messages and send them through the right channel by orchestrating real-time master data exchange between on-premises and cloud applications.

Given the fact that financial services organizations are subject to a wide range of regulations governing operational risk, consumer protection, anti-money laundering, and data privacy, it’s not surprising that 51% of CDOs are prioritizing risk management. The top areas were reducing privacy risk (52%), operational risk (48%), and credit risk (47%). In order for risk management frameworks to function effectively, data governance and controls must be enterprise-wide and not a series of one-off projects.

Data privacy, protection, and security-related incidents are a top KPI for 63% of financial services CDOs. The areas where they are facing significant difficulty delivering on the KPI include: ensuring appropriate protection for data in motion and at rest (54%); mapping data lineage, process flow, and proliferation (37%); and identifying and building an inventory of sensitive data (34%). Yet 46% reported not using data privacy management and protection capabilities. By contrast, Informatica helped EMC Insurance implement data discovery, classification, risk scoring, behavioral analytics, and automated protection for client and policyholder data in a single solution.

Sixty-four percent of CDOs are prioritizing revenue generation, including: increasing market share (67%); increasing customer retention (65%); and product and service innovation (53%). A data architecture that can connect to a diverse digital ecosystem can help drive revenue. Informatica helped Union Bank of the Philippines increase revenue by a factor of twelve and drive adoption of digital channels from 5% to 97%. They increased market share by empowering financial inclusion for the unserved and underserved population through secure digital services using mobile devices. The bank also increased Know Your Customer (KYC) data accuracy from 35% to 100% and reduced the time for Anti-Money Laundering Act (AMLA) reporting from five days to one.

Next Steps

I would love to hear your thoughts on the priorities in financial services and opportunities to use data to improve business outcomes. What best practices can you share with your peers on data governance and management? Do you want to see how you compare to your peers? Take the IDC Benchmark North AmericaEMEA or APJ to get a personalized assessment that compares your responses to those of other financial services organizations around the worldwide.

[1] IDC Survey InfoBrief, sponsored by Informatica, “The Priorities, Challenges, and KPIs of Today’s CDOs,” IDC Doc. #US46695720, August 2020.