With a growing customer base, an increasingly global emphasis, and a harsh compliance environment, financial services firms need GRC solutions that provide a better understanding of risk and a complete view of the customer.
A successful governance, risk and compliance (GRC) strategy for financial services firms requires a comprehensive approach to data management. Today, you must be able to integrate structured and unstructured data from internal and external sources. Looking at data as a whole allows financial services firms to:
- improve strategic business decisions in response to market risks and opportunities
- use proactive and effective monitoring of the changing regulatory landscape
- increase the efficiency of their organizations and lower the cost of compliance
- avoid fines, penalties and damage to reputation
- obtain a 360-view on risk and customer data within their organizations.
Legacy Data Systems Struggle to Meet GRC Needs
The evolution of the IT infrastructure in the industry since the client-server revolution has led to proliferation of systems and fragmentation of data. Perhaps because of this, market research shows that financial services firms still support their GRC programs largely through manual processes.
Data stored in legacy systems spread across departments and locations complicates those processes. This data includes new customer background data, customer contractual agreements, communication logs, and more. In addition, content from social media, instant messaging, forum usage, unstructured data from other sources, and trader behavior analytics increases the information that grows outside of transactional systems.
Pulling data from architecture that relies on relational databases with fragmented data is extremely complicated, costly and time consuming, and as soon as a source changes or a new source has to be integrated, the data model needs to be redefined.
This makes it difficult for analysts and internal GRC teams to understand the risk profile of new customers, conduct business planning and meet GRC mandates – let alone meet future, changing GRC demands.
Processing Financial Services Data Requires Tech Changes
In the aftermath of a succession of crises, the financial services industry has undergone a decade-long consolidation and is doing so under tighter regulatory regimes.
Hence, the response to the waves of regulatory requirements will have to include tackling the data management infrastructure, and that process will have to start with moving data out of silos and incorporating the content that is generated by social media.
A solution architecture that incorporates all types of data stored across systems enables financial institutions to obtain a 360-view of their data relating to risk, customers and trades. It also facilitates e-discovery.
Beyond compliance, this capability is critical for monitoring and making informed decisions especially when coupled with BI tools. The time to market and implementation schedules are significantly lower than that of traditional approaches providing operational efficiency at an enterprise level.
Conventional ETL-heavy processes inevitably cause delays as data needs to be identified, aligned, and transformed. Solving the data challenges – and subsequent development lifecycles – just cannot be ameliorated with current technologies.
In the next blog we take a deeper look at five major factors underlying the GRC challenge and how financial services firms can address them.
- Video: Regulatory Compliance Today, the Stuff We Can All Learn
- Whitepaper: Financial Regulatory Reporting Across an Evolving Schema
- Solution Sheet: Regulatory Reporting for Financial Services