Nobody would travel with an out-of -date passport, so why should the world of finance be any different?
And yet, many major institutions are at great risk of acting on outdated information as they navigate through the increasing complexity of modern-day markets.
With so much out-of -date information out there, it is imperative to know where data comes from and where it ends up. But despite the increasing importance of pure data to a bank’s wellbeing, numerous companies are still struggling to become data-driven businesses.
According to research that we carried out across 15 tier one and tier two US and European financial institutions, 60 per cent said that poor quality and inconsistent data was a major barrier.
Given the era we operate in, this is a staggering finding.
What is even more staggering is that other industries which are far less complex than finance have proven that there is no need to carry the burden of poor data on their shoulders.
For example, did you know that every cow in the UK has a passport? From this, dairy farmers know who the cow’s parents are, how many farms it has grazed on, which fields it has stood on, where its milk has been processed and by whom, even which batch of milk and cheese has ended up on each restaurant table.
Why is this so important? Well, one only has to look at the global rise in veganism to understand how concerned people are with what they put into their bodies.
Perhaps the financial industry should be taking a leaf out of the dairy farmers’ book.
The question is: could a financial institution be 100 per cent confident of where its data comes from? Do they really know what other data has been linked to the original source, and who has manipulated it?
Banks are not just looking for the provision of a commodity like milk. The data affects their entire reputation as a business.
It is now paramount that a bank can see where the information has been. Data needs to be digitised, with no manual intervention on the content. The information also needs to arrive in the right format so that it can integrate easily into tools and workflows.
There is, however, no overnight utopia. Data will continue to be expensive, and with the market dominated by just a few firms, financial institutions need to ensure that they are getting maximum bang for their buck.
Having survived successive waves of technology-fuelled disruption, firms are finally adapting to change.
The sheer scale of information may not be something that the markets can control, but the provenance and traceability of data, including where it comes from and where it end up, very much can be.
After all, if a dairy industry can recognise the importance of customer health through in-depth data insights, so too can financial institutions.