Data integrity proving a risky issue for financial services firms
Financial services organisations struggling to manage risk due to issues with data quality, availability and control, research finds.
28 September 2021, London UK — Legacy technology and manual processes are compromising Financial Services (FS) firms’ ability to manage and minimise risk, a new report from data automation company Duco and the Professional Risk Managers’ International Association (PRMIA) finds today.
The report, which was jointly commissioned by Duco and PRMIA, explores the state of data management in the risk sector and the impact data issues are having on business performance.
The survey reveals that almost three quarters (73%) of FS companies say they’re struggling with too many different formats and systems to manage their risk data, and over two thirds (67%) say they’re finding it hard to maintain data quality and integrity as it moves through the organisation.
As the volume and complexity of data in FS organisations continue to grow, risk teams are often finding that legacy systems and technology are not keeping up with requirements. Almost a third (31%) say their existing technology is too slow or expensive and nearly a fifth (19%) say their risk data is too complex for current systems. As a result, nearly two thirds (64%) of risk teams spend most of their time handling repetitive issues such as sourcing, reconciling and transforming data for use in risk management systems.
This is having a knock-on effect for the business, with 69% of FS firms saying they expect the cost of managing risk data to rise as they deal with these issues.
A large part of the problem is the continued reliance on legacy systems and manual processes. Over a third (35%) say Microsoft Excel is still being used widely throughout their business to store and manage risk data.
Yet despite this, there is still a nervousness around changing to more agile, automated solutions. More than a third (36%) say moving manual data processes onto new systems would be too expensive or time consuming, and over one in ten (12%) say they can’t see any compelling business case for automating their processes.
“These issues are starting to impact businesses in terms of slowing down decision making”, says Keith Man, Banking Ops and Risk Specialist at Duco. “Siloed data management strategies are causing data quality issues for most firms. But even more notable is that risk teams are being distracted from thinking long-term by day-to-day data management issues.”
However, there is an appetite for change, he says. “Firms recognise that new technology can play a key role in fixing these problems for good. This will allow them to shift focus from day-to-day tasks to longer-term strategy. Teams can then implement an intelligent data automation agenda, using an ecosystem of agile technology to ensure integrity across all risk data.”
Ken Radigan, CEO at PRMIA, commented, “PRMIA is pleased to have partnered with Duco in conducting this very informative survey. Issues around accuracy and timeliness of risk data are not new, but it’s clear from our members that traditional approaches are becoming more and more unsuitable as the volume and complexity of risk data continues to grow. Thankfully, it appears that firms both recognise the value of new technology, like Duco, and seem intent on harnessing it in the near future to beat these data challenges and take risk data management in an exciting new direction.”