Regulatory Data Management – The Gift that Keeps on Giving

By Michael Hutnyan, EVP Sales & Solution Strategy, Harte-Hanks Trillium Software

After reflecting on the recent holiday season, now that many of us have recovered from some extensive gift-giving (and are now paying the resulting bills), it occurs to me that my financial services clients are receiving a more troubling gift – one that only promises on-going costs and a possible deviation from growth and service - - new and ever-changing regulatory requirements.

I’m referring primarily to those government-sponsored, mandated regulatory demands that involve a significant data management component. Newly defined regulations such as FATCA and the yet-to–be-unveiled LEI (legal entity identifier), will require an extensive and proactive data management strategy by banks. They’ll need to clearly demonstrate knowledge and control over data and its quality in order to achieve compliance.

Like other data-intensive regulations before them, such as the FSA’s Financial Services Compensation Scheme and the Basel Accords, these new regulations necessitate a detailed readiness assessment and a remediation plan for relevant data defects in order to satisfy regulators’ demands.

Moreover, our clients confirm these regulations are not simply one time events that come and go. It’s widely understood that these regulations will morph and change over time, requiring an on-going understanding of the regulations and a flexible data quality management platform.

Our clients are loathe to invest in the same regulatory compliance effort more than once, and establishing a flexible data management environment that can change as rules change is critical for banks to keep cycles free for the real business of banking. Unfortunately, financial services firms today often find themselves with limited budgets, and only those items that “must be done” (such as complying with regulations) are receiving funding. 

A recent article in Bank Systems and Technology supports this trend. In this feature, Michael Versace of IDC comments that growth in IT spending for risk management (including regulatory compliance) will outpace the growth of overall IT spending and will top 15 percent of total IT spending in financial services in 2012.

So, it appears that our financial services clients will continue to have to do more with less, and deal with receiving the “gift” of a constantly changing regulatory world. My mom always said it is better to give than to receive. I think she was correct in this particular case, but, a data quality management solution that is flexible enough to work within your current financial data systems and calculation models to ensure regulatory compliance – now, that could be the very best “gift” for any bank this year.

How is your financial services organization handling regulatory compliance around data?