By Chris Probert, partner and data practice lead at Capco
Banks have always held vast amounts of data within their organizations but with the recent exponential growth in data volume, efficient usage and governance of data has become firmly established as a source of competitive advantage for financial institutions.
The ability to identify, monitor, interpret, and extract value from data is something that many organizations have historically struggled to achieve, mostly due to poor tracking of data across the enterprise. Data lineage serves as a tool to track data from its origins, through any transformations it may undergo to its ultimate consumption.
Financial institutions have an opportunity to provide major value to their organizations by using data lineage to provide benefits along three dimensions: regulatory compliance, control optimization and cost reduction.
Why data lineage – stopping Chinese Whispers
To understand how data lineage is useful, it is important to acknowledge the obvious: data in a large organization is not held in a single repository, but rather flows across many systems and databases. During this proliferation there is a risk to data quality, security and availability. For example, as anyone familiar with the game of Chinese whispers knows, despite best intentions an original message can swiftly metamorphize into something completely different as it moves down the chain from person to person.
Information is no different – data can become compromised every time it enters a new system or database. Data lineage offers a solution to this issue, as it allows compromised data to be hunted down efficiently and quickly.
Traditional data lineage and challenges
Data lineage rose to prominence due to requirements in the wake of the financial crisis as regulators sought evidence to substantiate the veracity of stress-test reporting for banks. Since then, regulations such as Markets in Financial Instruments Directive II (MiFID II) and General Data Protection Regulation (GDPR) among others, have required financial institutions to implement data lineage procedures to demonstrate the reliability of their reporting.
However, data lineage is currently underutilized. It largely focuses on the mechanical movement of data and less on its contextual flow; furthermore it is often targeted towards an IT audience, mapping technical data. In falling back on this traditional approach to data lineage, businesses are not tapping its full potential: namely, the insights provided through enhanced clarity around data movement and transformation.
For data lineage to be meaningful beyond mere regulatory compliance, traditional lineage must expand to address the following dimensions: who, what, where, when, why, and how. Establishing industry standards or accepted practices would help provide a structure for capturing these different dimensions and drive business value.
Three ways to make lineage useful
A big challenge facing organizations that want to use data lineage is the lack of standards around its depiction. There are significant differences how lineage is represented, ranging from spaghetti diagrams –which prove overwhelming to a business audience -through to process diagrams that often leave out data and technical representations of architecture and infrastructure that obfuscate the nuances of transformation.
There are three critical guiding principles to make data lineage useful and standardized: make it business friendly; highlight context and ownership of data; and show how data is transformed and used.
Making data lineage more attractive to businesses can be achieved by ensuring the presentation of lineage is easy to read and understand via business-centric nomenclature and easy-to-consume forms and applications. It is also important with data lineage to show only those elements that are critical to the output, or would impact the quality of the output if compromised. These are typically referred to as ‘critical data elements’ (CDEs) or ‘key data elements’ (KDEs).
The next step is understanding the context of the data – vital to setting up standardized data lineage diagrams. Organizations need to start by determining the connections that show who owns the process, the application, and the data element. Given the size and complexity of financial institutions, this can be a gargantuan undertaking. Once the data ownership structure has been established, the enterprise can begin to align the process and create a visual diagram of data lineage.
Visualizing the process by looking at the connections – application ownership, process ownership, data quality, data usage, access requests and the number of outstanding data issues – can help drive improvements, identify risk, and strengthen process governance.
Once each step is documented and unique data elements identified and validated by the relevant subject matter experts, an organization will have clarity around ownership of each stage of the process and the associated data elements. The enterprise will then be able to leverage process diagrams to better understand what happens to the data, not least how it is transformed and used throughout its lifecycle.
It is essential to know how data is moving, not just where it is coming from and going to. In determining the ‘who, what, when, where and how’ of data flow we can answer questions related to risks, whether they can be mitigated and the efficiency or otherwise of existing data management and processing systems. This leads to a more secure and streamlined data flow.
Cutting costs and boosting efficiency
Using data lineage, financial institutions can easily visualize the flow of data through systems and applications, making it allowing distinct patterns within an organization’s data – be they good or bad -to be identified.
Via data lineage organizations have an opportunity to optimize costs and processes by minimizing repetition and redundancy within their systems. For example, during account set-up an organization can end up with three separate applications performing just one function. Wherever data is handled by multiple applications for the same task that should serve as a red flag. This kind of pattern occurs often in organizations undergoing rapid growth through mergers and acquisitions or the launch of new products and services.
Without data lineage inefficiencies can remain hidden, leading to wastage due to improper data visualization and a lack of insight into applications. Data lineage allows organizations to clearly align“ business area” “process” and “applications” using visual diagrams that create a holistic picture of data management across the enterprise.
Once a redundancy in data processes is discovered, organizations can rapidly eliminate the associated wastage by enhancing one application to handle all closely related functions while retiring the rest.
Patterns for risk management
Determining where to implement controls within a given data supply chain is crucial for maintaining data quality and integrity. Data lineage techniques can quickly identify inefficiencies and risks that arise in common data control methods.
Two types of controls play significant roles in maintaining the quality of data. The first is an accuracy control, which is best implemented at the system of origin (where data is first created or entered). The second is a consistency control, which supports and maintains the accuracy of the data throughout the entire data supply chain. The recommended implementation of the consistency control is in applications downstream from the system of origin.
These two controls, when effectively maintained, will reduce in efficiency and duplicate controls, thereby improving data quality. However, organizations often unnecessarily build multiple accuracy controls into downstream systems. A classic example is a data warehouse or data lake where consistency controls would be the better choice. This leads to data in the warehouse or lake to diverge from the system of origin, creating a maintenance nightmare and leading to cost increases.
Data lineage allow organizations to make the correct choice between which applications require accuracy controls and which need consistency controls. If controls have been already implemented, it will highlight any redundancy, allowing the organization to optimize on controls and save costs.
As data flows from one application to the next within an organization there is an inherent security risk. The most vulnerable applications are those that are external-facing or vendor-hosted. Data lineage can spotlight such applications and in doing so lift the veil on security risks. Existing data controls can be reassessed and enhanced as necessary, reducing cyber risk and protecting data as it moves across the enterprise.
Data lineage will continue to evolve. At the same time, its power to help organizations think more clearly about their data, control frameworks and process optimization is yet to be fully realized.
Financial institutions that successfully leverage data lineage will drive value through cost reductions arising from the elimination of redundancies and unnecessary manual processing – and hence while simultaneously mitigating risks related to data quality, integrity and security via better controls.
Adopting common standards and injecting contextual content will facilitate the implementation of lineage in a business-friendly fashion and spur adoption. In today’s world of Big Data, data lineage offers organizations quantifiable business value as they move towards harnessing data as a source of competitive advantage.
It’s all relative: Older generations feel helping out the family financially is more important since the Covid-19 outbreak
Before Covid, 23% of people prioritised helping younger generations out financially, that increased to a third as a result of the pandemic
A recent survey* conducted by Hodge has revealed that the Covid pandemic has led to more people wanting to help younger family members financially.
A third (31%)** of those questioned said that since the Covid outbreak giving a financial gift to children or grandchildren is more important to them, compared to 23% who said it was a priority before the pandemic.
The traditional “Bank of Mum and Dad” is still very much open for financial help, with parents being responsible for 72% of the gifts, but the study also revealed that financial gifts can come from all corners of the family – including children (14%) and siblings (14%).
The survey also found that a third of people have received a financial gift from family, with those aged between 25-34 as the most likely to receive
The most popular reason for gifting money to family is for special occasions such as a quarter of gifts were given for weddings and birthdays but 11% of people have received money to help with big purchases such as cars and houses. In addition, 19% of people have received help with day to day finances, with around 14% of those receiving a gift have done so to pay off debt.
Emma Graham, Business Development Director at Hodge, said of the research: “Our study showed that, as a nation, we all want to help our family out when it comes to money. And whilst we all think of the Bank of Mum and Dad or Gran and Grandad as a traditional source, we were surprised to see that 14% of brothers and sisters are also helping out.”
The findings come from a recent intergenerational study conducted by Hodge, who interviewed over 3000 people about their attitudes towards finances and their aspirations for the future. The full research findings can be found at https://hodgebank.co.uk/2020/05/19/money-its-all-relative/.
As part of the study, people were also asked about paying back the gift, with 40% of beneficiaries expecting to pay their parents back, but this dropped to 28% if the gift came from grandparents.
From the gift donor’s perspective, 26% expect the gift to be paid back, however just 15% of grandparents expected the money back.
Hodge has produced a set of guides on how families can navigate the tricky subject of giving financial gifts within a family, as well as the considerations and steps that be families should think about taking before a gift is given, such as is it a loan or a gift and thinking about contingencies if the family member’s circumstances change. The guides can be found here: https://hodgebank.co.uk/news/
Emma continued: “It’s clear that families feel strongly about offering financial support to each other if they are able and this has increased since the Covid pandemic. Before Covid, 23% of people prioritised helping their families out financially in the next five years. Since the Covid-19 outbreak that has increased to a third of people saying helping a family member financially had become more important.
“So, it is clear that the Covid-19 lockdown and subsequent predicted economic downturn, has led to more families looking to share wealth to help younger children or grandchildren during this difficult time. Many people may look to Later Life mortgages, where many products have reduced their rates and have flexible lending criteria, to help out a loved during these difficult times.”
New report identifies the factors which will determine SMEs’ chances of a successful COVID recovery
· Analysis of the performance of over 1,000 UK small and medium-sized businesses by Allica Bank provides roadmap for SMEs
· Regular training, an openness to innovation, and a clear vision all contribute heavily to an SMEs’ chances of success
· Allica Bank has launched a programme of free workshops to expand on the findings and support business owners
Business bank, Allica Bank has combined data and insight from over 1,000 UK SMEs with a multiple regression analysis to determine what factors most closely aligned with an SMEs’ chances of success and separated the highest-performing businesses from their peers. These ‘rules for success’ have been compiled from the research data to support British businesses as they look to chart a course to post-Covid recovery.
The full report identifies six behaviours for small and medium businesses to follow, to maximise their chances of a successful COVID recovery. The six top-line rules emphasised by the data were:
Rule 1: SMEs should regularly train staff
Of the top-performing businesses analysed, 47% provided training for employees at least on a quarterly basis, compared to just 32% of other businesses. Regular employee training was linked closely to success by the model.
Despite this, many small businesses have neglected training and nearly half (46%) of the small businesses analysed only provide training for employees about once a year or less often. This included 15% that never provide employer-funded training. This discrepancy could represent a significant opportunity for small businesses to unlock the potential of their employees and thrive in the post-Covid economy.
Rule 2: SMEs need to focus on innovation and technology
Looking again to the best performing businesses, 76% were found to either continually (39%) or often (37%) be considering new opportunities for technology in their business. This is compared to only 51% for businesses considered to be outside of the top ranks, out of which only 27% admitted to continually looking for new technology opportunities.
Rule 3: Small business must have a formal, long-term vision
Nearly two thirds (66%) of the most successful businesses in the survey had a formal, long-term vision, compared to just 50% of businesses outside the top 100. Looking to the businesses that scored the lowest on the SME Performance index, only 37% claimed to have a formal, long-term vision.
Rule 4: SMEs should broaden their customer reach and find new markets
Of the top-performing businesses, 65% of these have overseas customers compared to just 40% of the worst performing businesses. Among the best performing SMEs, over a third (34%) identified international expansion as one of the top three drivers for their success.
Rule 5: SMEs need to develop reinvestment plans
22% of the best performing SMEs reinvested some of their profits into the business in the past three years with an average 9% of profits being redeployed. Tellingly, this is nearly double what other businesses admit to reinvesting in their business (5%).
Rule 6: SMEs should engage with local business organisations and networks
Of the top 100 SMEs, 30% had obtained external credit to expand over the past three years (compared to 24% of other businesses). Meanwhile, only 16% of all other SMEs had engaged with local enterprise partnerships or growth hubs in the past three years (compared to 23% of the top 100 SMEs).
Chris Weller, Chief Commercial Officer, Allica Bank, said:
“All small businesses are different, as are all small business owners, but one trait they share is an innovative resilience. Whilst the coming months and years will undoubtedly continue to present extreme challenges, there is no doubt that small and medium sized businesses across the UK will rise to meet them head on.
“To give them the best chance to succeed, though, they need to be equipped with the right tools. There is certainly no silver bullet or panacea for every small business, but as this study has found, there are a number of common factors found in the most successful businesses that allow small enterprises to thrive and that they can consider individually for their business.
“This research has identified common ‘rules for success’ that speak to every aspect of running a business, not just the financials. Once we saw these results, we wanted to use them to help small businesses begin to re-build and prosper, by outlining common factors and then examining how best they can be practically applied to businesses in all sectors of the economy.
“Small business owners and their employees have been hit hard by the crisis, but they have the drive and resourcefulness to breathe new life into the economy and bring energy to post-Covid Britain. Our commitment at Allica Bank is to give them the support they need to do so, every step of the way.”
The full report contains a wealth of additional data and insight into each of these topics. As part of its mission to empower small businesses, Allica Bank is making the findings freely available and running a series of free online workshops with relevant partner organisations for businesses to attend.
New research finds that financial wellbeing should be at the heart of banks digital experiences as the UK enters recession
MullenLowe Profero have today launched a new report focusing on two communities who will be hardest hit by the recession: 18-25 year olds and small businesses. These communities need financial wellbeing support at the core of an increasingly digital relationship. MullenLowe Profero partnered with Censuswide to survey 1,004 18-25-year-olds and 504 small businesses.
Concern around financial shocks is harming individual’s wellbeing
The survey finds the ability to absorb financial shocks being the critical worry affecting wellbeing and 40% of 18-25-year-olds are sometimes afraid to look at their bank account.
They are seeking financial education to relieve worries
With over two-thirds of respondents demanding financial education in order to find peace of mind and 40% of 18-25-year-olds state that thinking about their money has a negative impact on their wellbeing the report highlights the audience are open to more active support from banks. 60% of the audience feel banks should help them have the capacity to absorb a financial shock.
When our bank is in our pocket reminding us of our anxieties, is there now a duty of care to support our wellbeing?
The survey finds that the digital experience is now the number one reason for choosing a bank for 18-25 year olds.
With this shift in digital preference, people are expecting banks to play a bigger role in wellbeing. 58% of those worried about their money want banks to help them take control.
More than half of 18-25 year olds agree that a bank’s role is now to:
- provide education on money management
- help them keep on top of financial goals
- help them save enough money to cope with the ups and downs of life
People are feeling closer to local communities, but there is a gap in how brands should engage communities in a digital world
Half of 18-25 year olds agree that in the last few months the importance of their local community to them has increased. 40% agree they’ve engaged more with their local community in recent months. There’s a tension between how to engage a community as 60% agree they prefer a bank with better digital tools over a bank that offers more local branches. However, 60% feel banks need a branch presence to support local communities.
The importance of Global Wellbeing rises
Over half of 18-25 year olds agree that the events of the last few months have made them seek out brands that do better for the world. The research findings show that what they want most is to be recognised for their positive behaviours. 56% of the audience highlighted that they would find rewards and benefits for purchasing ethically and sustainably most useful.
Banks digital experience today lack empathy
In this time of reset, the survey found a third of customers and small businesses are considering changing banks in the next year as a result of the impact of the pandemic. The report concludes that brands that will win will champion financial wellbeing in the digital experience through empathy and emotional intelligence.
For the full report, get in touch with MullenLowe Profero at [email protected]
Howard Pull, Head of Digital Transformation Strategy at MullenLowe Profero, said: “Our findings are a wake up call for digital innovation in banking relationships. With digital experience being the number one choice for selecting a bank, there’s a huge opportunity for banks to support individual wellbeing at scale by understanding and responding to our goals and anxieties to build better money habits.”
The research was conducted by Censuswide, with 1,004 18-25-year-old current account holders and 504 small businesses with business bank accounts and annual revenues up to £2m between 23.06.2020 and 29.06.2020. Censuswide abides by and employs members of the Market Research Society which is based on the ESOMAR principles.
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