The post-2008 crisis landscape is dominated by regulatory reform, and effective data management can help with compliance. But this is only part of the story: if firms can manage multiple data sets within an enterprise-wide model, they can gain a real advantage over their competitors.
Regulations such as Dodd-Frank, EMIR, and FATCA place stringent demands on how firms track the entities they do business with. Industry-wide adoption of the LEI would help with this, by allowing the back office to clearly identify which transactions pertain to any given client.
But the adoption of the LEI is only half of the problem. Further complicating matters is the fact that firms often interact with a client in various different ways, meaning that their LEI will appear in numerous different data sets. Entity-to-entity relationships are complex: corporate entities can be Issuers of securities, trading counterparties and also institutional customers. How can a firm get a clear overview of its client relationships when they are stored in such a fragmented way?
The answer is simple – by linking entity data together into one set
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The traditional method of storing multiple disconnected data sets just isn’t viable in the current climate of regulation and increased competition, where financial institutions are trying to squeeze every last drop of efficiency from their business models. The industry needs a new approach, in which a single entity is linked to its various roles and identifiers, but not duplicated in various data sets.
This more streamlined system improves data quality, reduces redundancy, and increases auditability. But crucially, it allows firms to get the most from their data by understanding the interconnected roles and relationships of clients across multiple assets.
A 360-degree approach to data management presents a golden opportunity. It vastly accelerates the on-boarding process, maximizing the value the firm gets from each piece of data, and improves business agility by speeding up product launches and expansions.
The old model of data management is obsolete. Because of regulation and cut-throat competition, financial institutions need to sever ties with outdated approaches. Without effective and streamlined data management, they will limit their capacity for business growth.