ir015 dataflux financial services survey

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128199 CMP DataFlux\Reporting\CMP DataFlux Report v1/HM BQ/ ML 15-01-09

DataFlux FinancialServices Sector Research

March 2009


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Contents

DataFlux introduction and objectives 3

Methodology 4

Summary 5

Findings 10

Survey contact details 25

Appendix 27


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DataFlux introduction and objectives

The current market environment and increasing financial serviceslegislation demand that financial services companies hold instantaccess to reliable data about their customers and assets. Asrecession deepens, the way every financial institution operates isnow under intense scrutiny.

When faced with these challenges, the financial industry musthave the right processes in place to be confident that their data isaccurate. This research has been designed to benchmark theapproach the senior IT community in financial services industryare taking towards their data. We want to understand more abouhow widespread data governance is in this sector, what motivatesdata management strategies and what kind of rules the industrythinks should be introduced in the future to promote success inthis sector.

Good data should be considered the lifeblood of any organisationIf correctly managed, it will not only help companies to complywith legislation, but it will deliver fundamental business valuethrough operational efficiencies, cost savings, better customer

service and ultimately competitive advantage. In todayschallenging times, it has never been more appropriate for data tobe firmly on the boardroom agenda.

Colin Rickard

Managing Director, DataFlux EMEA


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Methodology

A CATI (Computer Assisted Telephone Interviewing) approach was used to deliver the survey togive a much better degree of control as online B2B surveys are very easily ignored or deleted.

To maximise the interviewing strike rate, and to acknowledge the time committed to the surveyby respondents, two participation incentives were offered:

To be entered into a drawing with the opportunity to win two 250 cash prizes

A high-level summary of the findings

44 interviews (15 minutes in duration) were completed amongst businesses with 500+employees in the financial services sector. Although this is a relatively low sample size, theuniverse is around 160 companies, giving a penetration of 28% of the target market. Generallythis is very much the upper end of the response rate. More typical levels would be around 10-15%.

Organisations and respondents were recruited from commercially available lists. ExistingDataFlux clients were not specifically targeted.

Field work was conducted by Perspective, part of the BDRC Group.

Field work period between 30/09/2008 08/01/2009.


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Summary


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Summary - 1

Do financial services companies take data quality seriously?

Data is seen as a strategic asset (by nearly 9 in 10 organisations) and the quality of data isbelieved to be important in the UK financial services sector, yet investment is currently drivenprimarily by regulation (73%).

Therefore many companies who are not sufficiently allocating the investment needed in theirdata are missing out a crucial competitive advantage in the market place.

Given this importance, the majority (9 in 10) have established a widely trusted enterprise view of

data.

However, in practice, over two-thirds are not managing their data at this level. Instead, dataquality management tends to fairly dispersed, with organisations managing it across multiple orindividual business units (providing a significant opportunity for providers like DataFlux).

Positively, data governance is clearly on the agenda, with a third having already completed aproject and nearly the same proportion currently implementing or considering launching one.


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Summary - 2

What processes or data management tools do they currently have in place?

Financial services organisations have a wide collection of tools at their disposal to manage data,with data cleansing (65%) and data quality (63%) tools mentioned most frequently.

Yet almost half of these tools are stand-alone solutions sourced from different providers.

Majority of organisations are equipped to process customer data against criminal lists. However,a significant minority (11%) report no such process is in place or they are unaware if any such

capability exists in their organisation (7%). A surprising find, given this is regulatory requirementhas been around for sometime.

Responsibility for data quality or governance initiatives tends to be scattered across thebusiness, and in a third of cases this responsibility belongs to the IT department. Interestingly,16% of organisations claim no-one has specific responsibility.


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Summary - 3

What is the future of the regulatory landscape?

There is strong expectation of further regulation in the future, primarily focusing on security,accuracy and quality of data.

Data security issues appear to be well understood by many. In the context of further regulation,the main references are around the prevention of crime, increased power for regulatory bodies,tougher penalties for breaches, strengthening of enforcement and the Data Protection Act andguidance around the sharing of data.

Interestingly, nearly two thirds believe a lack of attention to or poor control of data withinfinancial institutions is not linked to the recent financial crisis. However a sizeable minority(18%) felt that these issues were at least a contributory factor.

Most (2 in 3) agree data should be governed by universal standards but mixed views on the onekey factor that would make this successful. The companies surveyed, indicate that contentshould be wide-ranging, inclusive and industry-led (as opposed to government-led) witheffective and consistent enforcement.


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Summary - 4

What are the key challenges that face financial services providers in the next 12 months?

Key challenges in the short term are thought to be:

Seamless data integration: the complications of consolidation and probably with lessinvestment and resources available.

Effective data management: ensuring data security, compliance with existing and any newregulation that is introduced, maintaining accurate and up-to-date information, determining

who has access and how the data is used.


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Findings

Data IS seen as a strate ic asset t m st r anisati ns and the


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Data IS seen as a strategic asset to most organisations and thequality of this data is vital to meeting compliance requirements

86%

14%

Extremely important

Very important

Q1 How important is the quality of your organisations data to any

regulatory compliance requirements you may have?

Base: All (44)

89%

2%

9%

Yes

NoDont know

Q6 In your view, does your organisation view its data as a

strategic asset (like its buildings, products or people)?

Base: All (44)

Data Quality Importance Is Data A Strategic Asset?

C li ith i d t l ti i th i d i f i t t i d t


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Compliance with industry regulation is the main driver of investment in datarather than business efficiency or the need for a competitive advantage

Indicatively, smaller organisations (less than 1000 employees) appear to attach greater emphasison data for organisational efficiency than the larger organisations

73%

52%

45%

7%

Compliance led

Q3 Do you feel that your investment in data is compliance led or led by organisational efficiency and competitive advantage? Multi-responses allowed

Base: All (44)

Organisational efficiency

Competitive advantage

Other

77%

42%


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Majority (9 in 10 businesses) have implemented a widely trusted enterpriseview of data however two thirds are not managing their data at this level

Q2 Has your organisation established an enterprise-wide view of data that is

widely trusted internally?

Base: All (44)

91%

9%

No, but we dohave plans to

achieve this

Yes

in fact, data quality management tends to be a fairly dispersed activity, with 6 in 10

organisations reporting it is managed across multiple or individual business units

48%

32%

9%

7%

5%

Across multiple business units

At a strategic enterprise level

Within individual business units

At the application level

Dont know

Just a third areoptimising their data

management; thus68% could

potentially improveexisting systems

Q7 Which of the following best describes how data quality is being managedat your organisation?

Base: All (44)

Wide collection of tools in place to manage data yet almost half


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Wide collection of tools in place to manage data, yet almost halfare stand-alone solutions

Q8 Which of the following data management tools do you have in place?

Base: All (44)

Q9 Are the data management tools you mentioned primarily? READ OUT

Base: All (44)

66%

64%

52%

48%

45%

20%

2%

18%

Data cleansing

Data quality

Data profiling

Data modelling

software

Data integration

Enterprise contentmanagement software

Other

Dont know

30%

48%

23%

Dont know

Components of anintegrated suite of toolsfrom the same supplier

Stand-alonesoftware from

differentsuppliers

this proportion rises (to over two thirds) if those who are unaware of technology

solutions are excluded from the analysis

Data Management Tools are

Majority of organisations are equipped to process customer data


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Majority of organisations are equipped to process customer dataagainst criminal lists

Yes

7%

82%

11%

No

Dont know

Q12 Does your organisation have a process for comparing customer lists or transactions to lists of known criminals or terrorists(as dictated on international watchlists)?

Base: All (44)

and this capability increases the larger the organisation

69%

87%


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Data governance is clearly on the agenda, with a third having already completed aproject and nearly the same proportion currently implementing or considering doing so

Q10 Is your organisation currently implementing or considering implementing a data governance project?

Base: All (44)

34%

11%

18%

27%

9%

Already implemented

Implementing

Considering implementation

Not considering implementation

Dont know

29%

Smaller organisations less likely to be considering any data governance project

38%

23%


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Responsibility for data quality or governance initiatives tends tobe scattered across the business

Q11 Who is responsible for maintaining the quality of your organisations data or managing you data governance initiative?

Base: All (44)

36%

16%

14%

11%

7%

34%

16%

2%

IT department

Employees that deal withdata day to day

No-one has specificresponsibility

Data steward / manager

Central Information Office

Other

Dont know

Business analysts

Risk committee

IT Director

Business Risk Team

Combination of IT department, Compliance andData Protection Officer

Group Security Team

Senior Management and Group Marketingdepartments

Data Services team

Compliance Manager

Officer Appointed Chief Information Officer

In over a third of cases the IT department assumes responsibility. Interestingly, 16% oforganisations claim no-one has specific responsibility for data quality / governance

Strong expectation of further regulation in the future, primarily


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Strong expectation of further regulation in the future, primarilyfocused on security, accuracy and quality of data

Q13 As the person responsible for data quality in your organisation, do you think there will be more compliance regulation over the next fiveyears? If so, what do you think it will focus on?

Base: All (44)

2%

91%

7%

Yes

NoDont know

Main Themes:

Data security in terms of:

Prevention of money laundering, ID theft, scams, terrorism

Sharing of data and prevention of data losses

Increased power to regulators (e.g. commissioner, and moreintegration between the security bodies)

Strengthening of enforcement (i.e. increase in audits, reviews,raids)

Data minimisation (i.e. only collect information that is needed)

Stricter penalties for breaches of data security

Strengthening of the Data Protection Act

Lower mentions of regulated products (e.g. Insurance)

Data accuracy and quality

R d t b ti k f f f t l ti


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Respondent verbatims on key focus of future regulation

I think the focus will be on data security and

the execution of data quality, as well as

prosecution for data breaches. Dataminimisation which means keeping to a

minimum the data that is needed to carry out

operations.

(Data Protection Officer, 2000+ employees)

Security

Yes, the focus being on information security.Customers being fully aware that data is being

transferred overseas for administrationpurposes.

(Compliance Manager, 1000-1249 employees)

I think currently data security issues. Data

sharing between third parties and the controlsthat are around that

(Data Protection Adviser, 2000+ employees)

Accuracy & Quality

Probably more qualitative customer data. More

communication needed to have correct data.There is a need to send the correct informationto the correct customer and use data for

marketing purposes.(Data & System Development Manager,

2000+ employees)

Validity. Making sure that the data is valid.

Making sure that it isn't in breach of the DataProtection Act

(IT Manager, 500-749 employees)

It's going to be the accuracy mainly for allprevention. The accuracy is going to be key

because of the current climate we're in at themoment. Controlling the use and the security of

the data.(Data Protection Manager, 2000+ employees)

Were going to see the informationcommissioner going to court and getting more

power, also more dawn raids from the FSA andmore reviews from regulators.

(Data Protection Manager, 1000 1249 employees)

Most (2 in 3) agree data should be governed by universal standards but


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Most (2 in 3) agree data should be governed by universal standards butmixed views on the key factor that would make this successful

Q13b Should regulation be introduced to ensure data is governed

(i.e. evaluated, managed and passed on) according to universallyaccepted standards across the financial industry?

Base: All answering (35)

Q13c In your opinion what will be the one key factor in making the regulation

successful and beneficial to the industry?

Base: All answering (35)

63%

37%

Yes

No

28%

28%

20%

17%

6%

Industry-led not government-led

Wide-ranging and inclusiveconsultation stage to inform

regulation

Effective and consistent

enforcement

Replacement of currentfragmented regulation with one

new universal framework

Respondents indicate that content should be wide-ranging, inclusive and industry-led (asopposed to government-led) with effective and consistent enforcement

Other Statutory board

responsibility

Should stay as it is

Most believe poor control of data is notlinked to the recent


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Most believe poor control of data is linked to the recentfinancial crisis

Q13a What role do you think the lack of attention to or poor control of data within financial institutions played in the recent financial crisis?

Base: All (35)

63%

9% 9%

20%

Not linked

A contributory role

A fundamental roleDont know

50%

68%


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y g pseamless data integration and effective data management

Q16 In light of the recent upheavals in financial markets and high profile companymergers (e.g. LTSB and HBOS) what do you think will be the key data quality

challenges facing FS providers in the next 12 months?

Base: All (44)

Key challenges:

Data integration:

Merging of different systems, a huge IT

consolidation task! And undertaking this task with less resources

(e.g. staff, funding)

Data management:

Compliance with Data Protection, FSAregulation, etc.

Security of data to prevent fraud, leakages

Maintaining accurate, up to date information(which will also instil public confidence inquality of data)

Levels of access and usage of information

Others (single/few mentions):

Avoiding damage to reputation resulting fromdata leakages

Need confidence in the market place

More government-led initiatives

Integration

I think that it will be integrating different

systems, migration and consolidation becausenot every one has the same computer systems

so there should be a more standardizedsystem.

(IT Technical Analyst, 2000+ employees)

One of the biggest challenge will be, there'llbe more work but fewer staff to do it becauseof the current economic climate. It's harder to

make money as lending has been reduced.This also means that people have to do more

with less as there's no investment, so they willbe using existing tools to get more out of

them instead of purchasing newer tools which

might dress up data and have better GUIs(graphical user interface), which might leadinformation to be more accurate.

(Information Security Manager, 750-999 employees)

Respondent verbatims around data management challenge 1


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Respondent verbatims around data management challenge - 1

Data management

It is going to be ID fraud mainly and continued

maintenance in order to keep data as accurateas possible. also making sure customers

information is as up-to-date and accurate aspossible in order for customers to haveconfidence in what we hold is correct.

(Data Quality Manager, 500-749 employees)

Q16 In light of the recent upheavals in financial markets and high profile company mergers (e.g. LTSB and HBOS) what do you think will be the key data

quality challenges facing FS providers in the next 12 months?

Base: All (44)

I suppose ensuring that you are fully aware ofwhat data you hold and in what form. Who canaccess it and where your sending the data too.The key to that is the awareness of what data

you hold. What you need to use it for and whatit is actually used for.

(Data Protection Adviser, 2000+ employees)

I think that the biggest challenge will be theapproaches taken by major organisations.

Making sure that the best practice from eachorganisation is adapted will be the best way to

overcome the challenges.

(Information Security Manager, 750-999 employees)

Well the key challenges will be the conflict ofmaking money versus data quality. Data privacy

are not important in the boardroom and its acase of how do we keep our business afloat

versus how we keep up to date. Ensuring theyhave the right controls of data quality.

(Group Security Team Manager, 1000+ employees)

Respondent verbatims around data management challenge 2


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Respondent verbatims around data management challenge - 2

Data management

Again I would say security of data is key. If you

can hold data securely you'll be trusted byclients otherwise you'll lose clients on the basis

of trust.

(Data Protection Manager, 1500-1749 employees)

Q16 In light of the recent upheavals in financial markets and high profile company mergers (e.g. LTSB and HBOS) what do you think will be the key data

quality challenges facing FS providers in the next 12 months?

Base: All (44)

We are well structured in what we do so I don't

think there will be any new challenges. Wealready know what needs to be done. There will

probably be more management informationchallenges and getting more data and policy

demonstrating management information is themain thing.

(Deputy Financial Officer, 2000+ employees)

It'll be down to businesses to understand dataand the requirements. I think that is where

they will struggle. It will have to be arequirement at corporate governance and

business governance to understandrequirements for data quality and compliance.

Basically who gets to see what and why. Thechallenge for IT is what challenges we can putin place, to do this education is required as

some people don't understand the importanceof the data that they have.

(Information Security Manager, 2000+ employees)

For further information


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For further information

Please contact us if you would like to discuss any element of this report:

Colin Rickard, EMEA Managing Director, DataFlux

t 0777 615 4862

e [email protected]

Sarah Mulder, Director, Clarke Mulder Purdie Communications

t 0207 401 8001

e [email protected]

Mark Long, Client Services Director, BDRC

t 0207 400 1016

e [email protected]

About DataFlux and BDRC
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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About DataFlux and BDRC

About DataFlux

DataFlux is a leading provider of data quality and data integration technology. DataFlux enablesorganisations to analyse, improve and control their data through an integrated technologyplatform. With DataFlux enterprise data quality and data integration products, organisations canmore effectively and efficiently build a solid information foundation that delivers a unified view ofcustomers, products, suppliers or any other corporate data asset. A wholly owned subsidiary ofSAS (www.sas.com), DataFlux helps customers rapidly assess and improve problematic data,building the foundation for data governance, compliance and master data management (MDM)initiatives. To learn more about DataFlux, visit www.dataflux.com

.About BDRC

Founded in 1991, Business Development Research Consultants is a leading full service marketresearch agency. Working primarily for service organisations, the company specialises in hotels,finance, travel and tourism and mobile telephony. The acquisition of Continental Research atthe beginning of 2008 added media and advertising, public sector and technology research

expertise to the portfolio of market sectors covered. Headquartered in London, BDRC worksinternationally and has additional representation in South Africa and Asia. For more information,please visit www.bdrc.co.uk.
http://www.dataflux.com/http://www.bdrc.co.uk/http://www.bdrc.co.uk/http://www.dataflux.com/

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