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Opinion Piece: How To Extend Your Existing Data Management Architecture To Drive Greater Business Value

  • 4 min read

By Gary Allemann, MD at Master Data Management

For many years, the South African banking sector has strived to comply with international financial regulations, such as Basel II and its successors, in order to ensure cost effective access to global markets. With its focus on proving the accuracy of risk measures, Basel drove the adoption of data management principles within South Africa’s major banks, but with a risk focus.

The challenge banks now face is how to take this compliance-driven, technical implementation of data management capabilities and expand it to enable organisations to use their data to drive their business, to regroup post-Covid and to cope with rapidly changing customer expectations.

It’s not just about compliance

Compliance is important, and data management is an intrinsic part of meeting the requirements for many regulations in the banking sector, including the Financial Intelligence Centre Act (FICA) and the Protection of Personal Information Act (PoPIA). However, many financial services institutions have struggled to leverage this investment to enable a data-driven business. 

Data integrity is a powerful capability that directly increases the value of data. From improving customer satisfaction to increasing business agility to reducing risk and increasing revenue – a recent IDC Spotlight report shows that companies that invest in data integrity see positive returns across a range of business metrics. Conversely, a lack of investment in data integrity has a direct negative impact on costs and revenue.

The challenge lies in understanding how to engage business stakeholders by shifting the data culture beyond a compliance-centric view, which can be seen as blocking progress, to one that enables business goals and opportunities.

The importance of data lineage

Data lineage can be a powerful tool to help not only manage risk, but also improve business agility. Capitec, South Africa’s largest digital bank, needed visibility into their data for compliance purposes, but through the implementation of a data lineage tool, the bank has also seen a number of business benefits.

By understanding the impact of data changes on both upstream and downstream dependencies and being able to understand where these changes could result in data quality issues and inaccurate reporting, Capitec is now able to effectively understand and manage the risks of data changes.

In addition, they have a complete overview of their data pipelines, which not only boosts governance efforts, it accelerates new development, shortens time to market, and speeds up their IT modernisation process. Not only are they compliant, they can also leverage the benefits of increased business agility, and facilitate their migration into the cloud.

The data quality question

Financial services institutions deal with vast quantities of often highly complex data in multiple locations. Compliance requirements dictate that this data be consolidated, validated and verified, but this process can also be massively beneficial to business if approached from the right perspective.

In the case of Absa Capital, meeting regulatory requirements was an important consideration, but over and above that they wanted to enable the business to run more efficiently. Their primary business driver was to implement a new credit management system, but to do that they needed a better handle on customer data. Solving this data integrity problem was a business imperative, but in the process regulatory compliance was also facilitated. Furthermore, they managed to reduce customer onboarding time by 80% by capturing critical customer data correctly the first time.

Business and regulation

When it comes to data management, regulation and compliance is only one view of the problem. Data is used for multiple purposes beyond compliance and cannot be examined in isolation. To leverage maximum return, it is important to also take the business perspective into account. South African financial institutions have the existing investment in infrastructure; the next step is to plug the gaps, become more business-friendly, and extend capabilities to enable data to be leveraged to drive the business forward, improve efficiency, and facilitate innovation.