Michael Shashoua: What to Expect When Managing Data in 2015

As 2014 drew to a close, Waters’ sibling publication Inside Reference Data (IRD) took some time to ask respected data management operations executives, both at financial firms and the vendors that work with them, what they see as the likely trends for this new year.

Several interviewees cited BCBS 239, the European risk data aggregation guidelines that require regular stress tests in which financial firms determine if their capital reserves can pass muster in a crisis. (The US equivalent of BCBS is the Comprehensive Capital Analysis and Review procedures, or CCAR.)

Some wonder if this regulatory driver is necessary, even if the aim is to spur firms to do a better job of aggregating data. End-users tend to be more excited about blending different data sources in an effort to create valuable insights, which is a sentiment that Steven Totman, financial services industry lead at Cloudera, related at WatersUSA last month.

One might counter that self-regulation, for any purpose, is dying (see The Myth of the Responsible Banker in the December 2014 issue of Waters), and therefore the regulatory mandate from the authorities is essential.

Yet the grand ambition that Totman cites, in which unstructured data is harnessed and coordinated to produce previously unavailable insights, perpetually has to fight against operational budget constraints and the competing urge to cut costs. We hear that story time after time and it often runs through service providers’ marketing points that aim to persuade clients to outsource pieces of data management and other financial operations.

Could CDOs who are gaining traction and power over data management, weigh in on the issue of data ownership?

Could an upgrade to a data warehouse intended to achieve greater data efficiency and accuracy, celebrated for the costs it will save, come at the expense of accounting for more sources of data that would yield a valuable insight? Having the data aggregation requirements in place is a possible defense against missing that opportunity.

Steps to Enhance Operations
Incremental change will likely be the order of the day in 2015. In the IRD survey, ANZ Institutional Bank’s Mark Bands said the focus will be on maturing existing capabilities to reach their full potential. BNP Paribas’ Vincent Benita said the realization of the value of data, more than any technology, will change the reference data landscape, so firms will have greater appreciation of the licensing potential of their data. Thomson Reuters’ Tim Lind also pointed to maturing of data management infrastructure, as opposed to “breakthrough innovations.” Rimes Technologies’ Steve Cheng takes this further, stating that no specific new technology will affect reference data in 2015.

That doesn’t mean nothing of any interest will happen. Making data management technology more mature and capable requires work to integrate data sources, devise data strategies, and update and enhance data systems.

Could application programming interfaces (APIs) be the smartest or most effective option, given the need to improve the sophistication of data management systems, adding and upgrading their capabilities? Eagle Investment Systems’ Paul McInnis said he sees more usage of APIs happening. Or will cloud-based services prove more popular, as GoldenSource’s John Eley said? Or big data technology, as BNP Paribas’ Vincent Benita noted? Could cloud resources be smoother at the task of obtaining all available data, including unstructured data and social sentiment data that Eley and Lind cited as important?

The bottom line could be managing expectations, whether it’s those of regulators, as HSBC’s Chris Johnson said, or data consumers’ expectations for what systems and services can accomplish. While the past year has seen considerable progress, particularly with legal entity identifiers and elevating data issues to the boardroom level, as those who responded to IRD’s trend questions did attest, 2015 is likely to be dominated by figuring out the nuts and bolts of data operations that need to change to carry out grander plans.