The banking and financial services sector is one of the most important components of any economy. In this post, we are discussing the data governance best practices for banks that will help them secure their information assets. Entities in this sector are privy to critical data related to individuals, businesses, and other organizations including governments. Any breach in their system can expose these valuable assets to unauthorized users and compromise the financial well-being of original owners. In some cases, the infringement can even cause grave harm to the nation’s economy. Banks and financial institutions need to have an effective data governance strategy to ensure the safety of the information they possess. While financial organizations are focused on corporate governance, they rarely adopt the same intense approach towards monitoring their information management program. This is difficult to understand as the nature of data they possess is too sensitive to leave it without adequate protection. The following are the best practices that banks must follow to exercise effective data governance.
1. Know About All Applicable Regulations
It is an indisputable fact that data is an asset. The information generated by an organization has the potential to improve its efficiency and performance. The main objective of data management is to extract as much value as is possible out of the data assets. However, the categorization of information as an asset has a downside too. It has made data a target for unethical elements. There have been numerous cases across the globe where information assets were stolen. This led to the implementation of data protection laws in various jurisdictions. Modern-day banks are involved in facilitating global transactions and they have to be aware of the legal regulations of various locations. The GDPR is one of the most well-known data protection laws. This regulation has been enforced in the European Union and must be followed by all organizations that access information of entities belonging to the area. Another legislation that has been implemented in the region is the Markets in Financial Instruments Directive II. organizations managing assets like shares, bonds, etc. for investors must know about this law. All banks have a legal department and they must instruct their lawyers to keep track of all such regulations so that the organization can comply with them.
2. Involve The Leadership In The Program
While data governance will be effective only if it is practiced by all relevant users across the organization, it cannot be sustained without the active participation of the top leadership. Involve the key executives in the program right from the very beginning. They must be a part of the group framing the institution’s overall data strategy. Banks need to create a top-down framework wherein the responsibilities are first allotted to the board of directors and other senior management figures. They must then study and approve all major decisions related to the initiative. The entire monitoring system must be created under their supervision and they must be involved in delegating responsibilities to users at the lower hierarchical levels. The executive leadership must also participate in formulating the data quality control procedures and devising the accountability mechanism.
3. Devise A System to Monitor Key Metrics Regularly
One of the most important data governance consulting best practices for banks is to evaluate the efficiency of your program to ensure its productivity. Banks must identify some key metrics related to data quality. The governance team must keep a close watch on these metrics and check whether they are within permissible limits or not. Any dip in the values will indicate that the performance is slipping. This will help the team in taking the necessary steps to identify the root cause of the problem. Another area where financial institutions need to monitor their performance is policy adherence. Since such organizations are dealing with critical information, this aspect of governance assumes great importance. Banks must define adherence standards and assess their employees’ performance on those metrics. This will ensure in reducing the risk of errors that can cause data loss.
4. Focus On Effective Implementation
Another important practice that banks must include in their overall data approach is to focus on effective implementation. Organizations spend a lot of time in planning the initiative and they need to make sure that the strategy is executed properly. It will be impossible to enjoy the full benefits of the program without an appropriate implementation plan. All the relevant users must know the correct method to conduct the specified processes. They must be imparted proper training so that they can handle all the technological tools easily. Make sure that the policy is extensively documented and made accessible to everyone across the institution. This will help in increasing the awareness of the program and aid its execution.
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The sensitive and valuable information that financial institutions hold makes it necessary for them to have an efficient monitoring mechanism for their data management program. The data governance best practices for banks mentioned here must be implemented by them to establish an effective framework at their organization.