As the financial services industry starts to harness a raft of new data sources for fast, effective and usable insights, the bottleneck for financial institutions becomes how well they really understand their data management processes.
How many firms, for example, can answer the following questions: Do we understand the impact of bad data quality? Can we measure this quality, and do we have full oversight over the steps in the data management process? Can we pre-empt data issues? When data issues arise, can we take restorative action quickly and track adjustments along the way without losing oversight of those changes?
Hugo Boer, Senior Product Manager, Asset Control, outlines why the onus is on transparent, end to end financial data management to enable real-time insight into daily data sourcing, mastering and distribution processes, to improve workflows and increase operational efficiency if firms are to unlock the value from all their new data sources.
New regulatory drivers and business pressures have led to increased scrutiny on the data management process. For example, the ECB’s Targeted Review of Internal Models (TRIM) was introduced with the aim of assessing whether internal model results to calculate risk-weighted assets were reliable and comparable. The TRIM guide contained a specific Data Quality Framework focusing on data accuracy, consistency, completeness, validity, availability and traceability as a precondition for these models.
This regulatory focus is, however, just one aspect of the growing recognition amongst financial institutions of the need to improve insight into data management processes. There is huge business pressure on the data management teams to not only manage increasing numbers of data sources but also to deliver accurate and consistent data sets in ever decreasing time windows.
Despite overlap between the data used by different departments, many teams are still operating in functional silos, from finance to risk. In an increasingly joined up and overlapping corporate data environment these dispersed data management activities are inherently inefficient; from parallel data sourcing teams buying the same data multiple times to expending the same effort on data preparation. The result is not only high data sourcing and preparation costs but unnecessary data storage and, critically, unacceptable operational risk.
What is required is a single overview of the data management process; the ability to track data collection and verification progress and gain rapid insight into any problems that could affect delivery Service Level Agreements (SLAs). And while companies have attempted to deliver point oversight via existing Management Information tools they have failed to provide an intuitive single view over the entire data management process across the business. What Data Management teams require is transparency across the diverse data silos and deliveries to data consumers and insight into the status of every process of data sourcing, cleansing and verification through to delivery to the downstream systems. Essentially, data management teams need a single view into the health of corporate data.
The implications of enhanced data transparency are significant. In addition to meeting the regulatory requirements associated with increased data scrutiny, including data quality, visibility and completeness, with a single view of the entire data management process, organisations can begin to drive significant operational change and create a culture of continuous data improvement.
For example, a complete perspective of any overlap in data resources will enable streamlining of data acquisition, reducing both purchase costs as well as data cleansing and delivery costs. In addition, it will overcome the current risks associated with a lack of data understanding between different areas which can create significant federation issues that can affect both operational performance and regulatory compliance. Simple steps such as calibrating consistently applied rules for data sets or asset classes, and ensuring changes to data cleansing rules are documented, will further reinforce the value of acquired data to the business.
Extended Data Understanding
This transparency into the status of data sourcing, processing and delivery should not be limited to data management experts: transparency of the data supply chain should be shared with everyone in the company, providing end users with insight into the quality of the data used for risk, finance, post-trade-reporting and so on. Data confidence is a fundamental requirement in post financial crisis trading and providing end users with access to a simplified view of the data acquisition, cleansing and provisioning process for each data source will play a key role in fostering a common, companywide understanding of the data and how it is used.
For example, showing users that e.g. Bloomberg data is used as the primary source for US corporate bonds, Thomson Reuters data for Foreign Exchange and Six Financial data for corporate actions; capturing comments from data analysts when this hierarchy is changed; what data cleansing rules have been used; and when manual intervention took place can all be valuable information. This transparency will support better data knowledge and confidence and can also overcome some of the data misalignment that has evolved over the past couple of decades. With better understanding of the end to end process for each data source, firms can begin to spot trends in the relative quality of different sources per market and asset class. Are there repeat errors in a data source? Is there an alternative data source already being used somewhere else in the business? Or is it time to onboard a new provider? End to end data management visibility will enable firms to drive a culture of continual improvement, addressing data quality issues and seeking out the most effective data sources for the business.
The total cost associated with end to end data management is becoming far more apparent, especially given the growing overlap in data usage across the business and the rise in new data sources available. Add in the escalating regulatory expectations for robust processes and the operational risk associated with siloed data management teams and the implications of this lack of transparency are becoming very apparent.
To maximise the value of new data sources, financial institutions need to evolve from departmental data silos and achieve end to end to transparency of the data management process. Furthermore, while this will significantly improve the data management operation it is also essential to push data responsibility and knowledge to the end users: data quality is a business issue and providing data transparency to business teams will be key in creating a strong culture of continuous improvement and leveraging feedback to drive up data quality and confidence across the institution.
Ahli Bank, Oman, is SunTec’s 50th customer for its Indirect Taxation Solution
SunTec’s GCC VAT compliance solution to help Ahli Bank automate end-to-end VAT compliance process, manage regulatory changes, and seamlessly integrate it with the existing IT ecosystem
SunTec, the world’s #1 relationship-based pricing and billing company and the provider of #1 GST and VAT compliance solution for Banks and Financial Services in GCC and India, has partnered with Ahli Bank, Oman, to provide its GCC VAT compliance solution.
The win is a landmark one for SunTec as it marks the 50th customer for its indirect taxation solution. SunTec has garnered 24 customers in India and this is the 26th customer in the Middle East to acquire the solution.
VAT is likely to be introduced in Oman in early 2021 and Ahli Bank has taken the proactive step of adopting a VAT compliance solution to ensure operational efficiency, enhance revenue, and augment customer experience.
Amit Dua, President – Client Facing Groups, SunTec, said, “We are delighted to partner with Ahli Bank, Oman in what marks a historic win, in their journey to ensure VAT compliance. We understand that the VAT landscape is evolving within the GCC, and therefore, our solution offers agility to respond to these changing regulatory requirements. With the Xelerate platform and GCC VAT compliance solution, Ahli Bank can digitize the entire VAT compliance process and comply with least number of changes to their existing technology infrastructure.”
He added, “VAT is a crucial step that the GCC countries have taken to implement tax regimes. It is imperative for banks and financial institutions to have a robust and scalable solution to accommodate their specific needs. Ahli Bank joins the list of more than 20 banks who have adopted our GCC VAT Compliance solution. I’m proud to say that approximately 3 billion transactions per annum are processed through our GCC VAT/ GST compliance solution across our client base.”
Said Abdullah Al Hatmi, CEO at Ahli Bank, added: “It is extremely crucial for us to be ready for VAT compliance. We are very happy to partner with SunTec to deploy GCC VAT compliance solution. With SunTec we will have a single solution in place covering all aspects of VAT compliance and we will be future-proofed given that any future regulatory changes will be handled by the solution with ease.”
SunTec’s GCC VAT compliance solution based on the Xelerate platform will enable the bank to smoothly comply with GCC VAT regulations and manage potential regulatory changes with ease. The single end-to-end solution helps automate the entire VAT compliance process including centralized rule-based tax determination, input tax recovery, tax invoice, reconciliation, corrections, adjustments, statements, and regulatory reporting.
SunTec GCC VAT Compliance solution is architected to meet the unique needs of banks and financial services firms and can easily integrate with existing IT systems. The solution is designed to process all taxable transactions across business lines and applications, reduce cost of compliance, mitigate potential risk of compliance violations, penalties, and reputational risk.
Securing Digital Transformation in Financial Services
By Bindu Sundaresan, Director, AT&T Cybersecurity
In the last year, financial services organizations have been pushed to speed up their digitization strategies faster than they could have ever anticipated. The COVID pandemic has closed the doors of many physical banks, forced them to move many interactions with customers to digital and introduce new measures so employees can carry out their jobs from home.
The uptake of digital banking has been immense with a recent report from World Retail Banking revealing that 57 percent of consumers prefer internet banking in the Covid-19 era. Today, connected consumers expect near-real-time online transactions at their own convenience, 24X7, and they expect banks, credit card providers, and stockbrokers to provide uninterrupted web services wherever they are in the world.
However, while this digitization has enabled banks to fully serve their customers during the pandemic, it has raised the security stakes considerably.
All around the world, while financial services organizations are adapting and taking advantage of digital technology to make consumer banking and payments safer, faster and more convenient, cyber criminals have been looking at ways to exploit these new initiatives.
What are the best ways financial organizations can embrace digital transformation, without compromising on security?
Embracing Digital Transformation Security
Financial institutions have long been a top target for cyber criminals and as these organizations broaden their digital footprint, their risk profiles change, and their attack surface widens.
In fact, a recent report from AT&T Business revealed that many organizations have noted an increase in malicious activity and cyber-related fraud against themselves and their customers, since the coronavirus pandemic struck. The attacks on institutions are typically happening through malware or social engineering campaigns, while customers are especially vulnerable to phishing with cyber criminals sending out fake COVID-related emails disguised as if coming from banks.
To help understand and manage these risks, financial organizations need to be proactive with their cybersecurity. One of the most important steps they can take is embedding security into new services from the very beginning. This will enable business leaders to make informed decisions, allocate resources efficiently, and understand the value of systems and information.
Banks and other financial institutions handle some of the most sensitive information for their customers and business – Personally Identifiable Information (PII), credit card numbers, and account information. However, as access points to reach this information increases, security should be embedded into systems earlier in the development process. To help achieve this, security teams need to work more closely with developer teams at the beginning of development stages when new technology is being introduced, rather than security being bolted on at the end, which is something that has traditionally happened.
Building a security-conscious culture is also essential, particularly as employees today are more frequently working from home. Employees need to be educated about the most current fraud and phishing scams and how to avoid them. They should be instructed to access sensitive data from a secure network, using their company device, and through the prescribed channels—not by clicking a link in a newly received e-mail. Employees should not open unexpected e-mail attachments and should report suspicious e-mails to the company’s IT department.
Since external IT services are ubiquitous in today’s business environment, it is imperative that as financial services organizations assess technology providers to provide that these services do not pose an immediate impact, while also strategizing how best to fortify resilience against third-party challenges. Many third-party services are critical to an organization’s success, including technical support, cloud-based financial applications, security monitoring, email and data backup solutions. Vendor management is a complex and time-intensive task which many organizations do not, and in many cases, cannot dedicate the time and resources to managing. For companies with a small number of vendors, this can be manageable, but most organizations will need additional support to create and implement these programs effectively. By dedicating resources to developing a program, organizations can begin to understand and eliminate the threats posed by third parties.
Financial institutions should also consider implementing a Zero-Trust approach within their security strategy. Zero Trust is a cybersecurity model with a tenet that any endpoint connecting to a network should not be trusted by default. With Zero Trust, everything and everyone— including users, devices, endpoints —must be properly verified before access to the network is allowed. The protocols for a Zero Trust network outline specific rules in place to govern the amount of access granted to users, based upon the type of user, their location, and how they are accessing the network. If the security status of any connecting endpoint or user cannot be resolved, the Zero Trust network will deny the connection by default.
Since the beginning of the pandemic, financial organizations have been forced to change the way they operate. Employees are now working more frequently from home and many banking services can now be done online. While these steps have been vital to keep the finance industry moving during the pandemic, they have introduced new security challenges.
As these organizations embrace digital transformation and are shifting to the cloud, simplifying technology infrastructure and outsourcing workloads to third parties, they are also expanding their cyber risk. Cyber has become more prolific across systems, platforms, and people — employees, customers, and partners — and enterprise leadership must correlate all of this to stay ahead of the adversary and help protect the organization’s most valuable assets.
Financial institutions therefore must be increasingly vigilant, and increasingly well-equipped technologically, to protect themselves from sophisticated attacks. In this way, digital transformation becomes both a critical contributing factor in the problem of growing cyber risks today—and a critical resource for solving it.
Using technology to optimise your finance
By Mark Pullen, CEO, Xledger
Covid-19 restrictions and ongoing uncertainty have prompted a fundamental switch in mindset across a multitude of different sectors. Many organisations have begun to recognise that outsourcing their finance can make them more agile and give them the competitive edge they need to compete and scale effectively in today’s market.
Solving the pain points
Inefficient processes are prone to causing delays and errors which can have a huge impact on the bottom line when viewed at scale. They can also negatively impact the client experience, causing frustration with missed deadlines and mounting uncompleted tasks.
New finance technology is automating many of the daily, monotonous back office functions such as bank reconciliation and invoice entry, meaning that the nature of the work that a finance professional provides will change. This presents a huge opportunity as it gives these employees the opportunity to be involved in higher-level work. Technology can also provide a resource that gives real time insight, allowing for better strategic decision making, which is so key in the current climate.
Optimising your finance function
Outsourcing high-value services within the finance function can improve workflow by implementing a defined and transparent process which streamlines operations. For a finance department, this can speed up areas that require internal controls such as expense reporting and cash release, but it can also speed up the full lifecycle of a project; from time tracking and resource to accounting and billing.
There is also a cost efficiency benefit when outsourcing, as management bandwidth is effectively increased by eliminating the need to be involved in many of the day to day processes. Instead this time can be focused on other business priorities and planning for future growth.
Outsourcing accounting functions to bespoke and standardised technologies means using data led processes that can be measured, optimised and benchmarked against in-house requirements. These processes can also be undertaken remotely, boosting the resilience of your business in these uncertain times.
Case study box-out: RPC Tyche
RPC Tyche is a global insurance software supplier with offices in London, Paris, and the USA. Initially a division of award-winning law firm RPC, but now a stand-alone entity, RPC Tyche’s main software offerings support capital modelling, and pricing commercial insurance and reinsurance.
As part of a restructuring process following the de-coupling with the law firm RPC, RPC Tyche had to separate its back-office processes. They remained under the umbrella of the law firm while the changes were taking place, so initially had some flexibility with the shared finance system, but time was running out to separate the two entities cleanly. As a stand-alone company, RPC Tyche now needed its own financial system; one that could align with its new business processes and that could be implemented quickly to deliver the organisation’s business objectives. Furthermore, they needed a new finance solution that could help them grow exponentially, facilitate a globally diverse group structure, and still maintain efficiency when operating as a small team.
Gavin Dilley, Chief Finance Officer for RPC Tyche commented, “Following an initial discussion with a third-party advisor regarding Xero and Quickbooks, we were recommended Xledger because we required a swift and scalable solution. After contacting Xledger, their tried and tested implementation methodology ultimately assured us that we would achieve the fast-paced implementation needed for our go-live objective. We also really liked that Xledger was a multi-tenanted, true cloud solution with its scalability setting it apart from the competitors.”
Implementation and training
Following conversations with Xledger, RPC Tyche created a project management team to keep everything on track on their side, an arrangement that Gavin emphasised “worked really well.” He said that “as a small project team, the flexibility to undergo substantial configuration during the training sessions with the Xledger consultants brought focus and enabled us to dedicate sufficient time to the system without distractions.”
Although the implementation was expected to take three months, RPC Tyche experienced hold-ups owing to the separating of back-office processes, so they were pleased when it was mutually agreed to facilitate a one-month delay.
“The implementation process was highly effective, and we’re very happy with the results,” said Gavin. “Since implementing the Xledger solution, we’ve been so pleased we haven’t had to dip back into the old system as the transfer of historic data has been particularly successful.” RPC Tyche had a large volume of historic data and transactions, including timesheets and work in progress reports that were all successfully migrated to Xledger during implementation. “We’re particularly happy with how easy it has been to onboard our new Finance Controller, due to flexible training and the system being so intuitive.”
Gavin added, “Since implementing Xledger, we have far greater reporting flexibility, better distribution of skills within the finance team and are naturally more self-sufficient because we can make amendments to the system without relying on the software provider.
The system is easy to use, and the purchase order functionalities, integrated workflows and automation of processes have enabled us to be highly efficient, even as a small finance team. Not to mention that the Xledger support team are incredibly responsive, so we can continually maintain productivity.”
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