IBS Journal May 2016
39
management, and technical aspects like data timeliness, accuracy and completeness for risk reporting purposes is drawing significant spend from the global systemically important banks (G-SIBs) it is initially targeting.”
HSBC tried to create a flexible service orientated architecture (SOA) last decade with its ‘One HSBC’ project, led by then CIO Ken Harvey. This sought to integrate its retail operations into a holistic whole, but in common with many other banks its project was blown off track by the 2008 financial crisis. As survival concerns have lessened HSBC is returning to the fray. However, its present CDO, Peter Serenita, is under no illusion about the challenges. “We are moving to a world where data will continue to grow and new sources will emerge so the ability to totally ‘control’ all data will not be possible,” he says. “New techniques need to be developed – and are now possible – to control the data that a bank produces and merge (or align) it with data from many different disparate sources.”
“Banks need to apply good data management practices, such as ensuring clear and consistent definitions, data ownership practices, lifecycle management and so on.” Alignment, data governance and incremental roll-outs are the watchwords this time around, rather than attempting a holistic whole transformation in one giant step.
At Bank of America Merrill Lynch (BAML) they are also seeking to overhaul their entire IT as the six-year Model Bank Project comes to a close. BNY Mellon and many other banks are undertaking similar digitisation efforts.
According to Temenos’ Winship, there are four historical main streams of functional BI usage within banks, covering: finance; the customer; operations; and risk.
“Traditionally, the majority of BI investment was made in the financial and risk areas, as you would expect in banking,” he says. “These investments are not diminishing. For instance, the Basel Committee on Banking Supervision (BCBS) 239 Principles for Effective Risk Data Aggregation and Risk Reporting (RDARR), which is focused on improving data policy concepts such as governance and
Domestic D-SIBs will follow and no doubt other banks that aren’t necessarily compelled by the Basel Committee will adhere to the 239 Principles as a useful data management template. Such groundwork could eventually assist customer-facing BI and other applications.
Winship claims that, “we are now seeing additional BI investments on the customer, operations and social analytics” due to the “rise of digital banking”, the threat of disintermediation and banks need to improve their customer analytical capabilities. This is true, but compliance is still getting the lion’s share. If it’s not BCBS 239 that an established bank is worrying about, it’s new more stringent Know Your Customer (KYC) or supranational tax requirements. Customer-focused BI could be last in the queue for investment money.
Alan Cole, director of technical operations at Misys Cloud Services, maintains that the move towards a customer- centric data driven bank is a voyage. “It is a complex, difficult journey but one that will deliver rich rewards for banks,” he says. “The goal of having single solutions provided in a modern, scalable, secure and flexible manner provided on a ‘consume’ basis is the future.”
Specific BI tools should theoretically be able to swap in and out of an SOA environment and be able to easily tap into accessible cloud-based data infrastructures. These are likely to be a mixture of hybrid and private clouds. Whether the dream lives up to reality remains to be seen and it will take time. If banks don’t do it, however, then the likes of Google, Facebook and other tech-driven masters of data, may spot opportunities. This could leave the incumbents as ‘dumb plumbers’ with only low-value skinny data processing business.
“They are learning to treat data as the asset,” counters HSBC’s CDO Serenita, “as opposed to a necessary outcome of business processes.” That is undoubtedly the way forward. BI tools will contribute, in hybrid or private on- premise clouds, once data governance and control at banks improves.
www.ibsintelligence.com
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