How to build a sustainable, value-focused data culture

Financial services CDOs weigh in on how regulation, growth and cost drives their current efforts and how each will affect future endeavors.

financial data ts

For many financial services organizations, the role of chief data officer (CDO) has evolved in response to the current regulatory focus on data. Much money and effort has been spent to comply with new regulations, but tangible benefits for the business aren’t accruing fast enough to justify sustained investment.

As a result, CDO longevity has been anything but, and organizations are starting to “reboot” their role and the focus of the CDO. The “tick the box” regulatory mentality has been both a blessing and a curse, providing much needed short-term funding while also generating an “are we done yet” sentiment around this investment. This sentiment is preventing CDOs from creating real and sustainable culture change – using data as a driver of innovation and growth.

[ Related: 8 challenges that keep financial services CTOs and CIOs up at night ]

In a recent KPMG pulse survey of selected financial services CDOs in the U.S. and Canada, respondents were asked to what degree each factor – regulation, growth and cost – was driving their current efforts and to project two years out how they anticipate this changing. While the respondents see little movement in cost (+3 percent) over the next two years, most believe regulation (-23 percent) will be supplanted by growth (+20 percent) as the main driver for data related initiatives by 2018. This will have major impacts on how data is positioned within these organizations.

kpmg survey chart KPMG pulse survey

In retrospect, the success or lack of success of the CDO organization has largely depended on looking beyond the goal of achieving regulatory compliance. The question they need to answer is “what role do they think data can play in expanding and growing their business. If organizations want to take advantage of disruptive technologies and opportunities for revenue growth, a “new normal” anchored in business value is needed.

There are no easy answers or perfect models for this for any financial services company. However, Freddie Mac‘s Single Family Business Unit, which represents approximately 80 percent of Freddie Mac’s mortgage volumes, has developed a comprehensive approach to the evolving CDO position, which is based on six key foundational principles.  

1. Embed in the business. A clear linkage to enabling the business strategy in addition to the regulatory and technology agendas is critical so that a sustainable value proposition is created.   Freddie Mac’s vice president of data governance for the Single-Family Business, reports to the head of Freddie Mac’s largest business unit-- not to risk management or IT. This brings with it a heightened sensitivity focused on moving fast enough to be relevant to the business, otherwise, the businesses they support will find their own way forward which often does not align to or leverage new data focused capabilities and standards critical to organizational adoption. The vice president of Data Governance governs through collaboration, but retains a 51 percent vote on matters concerning their “data supply chain” and the platforms for which she is the business sponsor.

2. Cultivate strong partnerships. The relationship with IT, including Architecture and IT Delivery, has been at the foundation of the program in both design and execution.   IT leadership in particular has been critical in helping align and refocus accountability for data with the business, and for jointly establishing and staffing a big data center of excellence to help bring advanced analytics to fruition. Partnership with third parties was also core to their approach. She used them to provide acceleration and put wins on the board early in her journey, reducing the “trial and error” time that her new and growing team would likely experience on their own.

3. Focus on strategic value alongside control. While data control and governance are one pillar of accountability, from the beginning Freddie Mac focused on building a foundation of capabilities that empower the business lines through more efficient access to different types of high quality data. This helps the business innovate and ultimately make better informed decisions. In doing so, the impact of data investments is more directly felt in business.

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