UK financial services organisations are leaving themselves vulnerable to a host of problems associated with poor data quality, according to the results of a new survey released today by Datanomic, the data management software provider.
The survey shows that a large proportion of firms believe that they may be violating compliance and other legislation, as well as risking the success of their IT implementations and losing competitive edge through poor business decision making because the data they rely on is not of a high enough standard.
Data quality is clearly a serious consideration for financial services companies. 100 per cent of respondents said that data quality is important to the success of their organisation, with nearly half (46%) rating it ‘very important’, and nearly one third (31%) rating it as ‘critical.’
Despite this huge level of importance, almost a quarter of these companies (23%) said they have no mechanism in place to monitor the quality of their data, placing the financial services at eight per cent above average. 15 per cent said they rely on ad hoc audits to ensure standards are maintained. However, 23 per cent do carry out at least one audit per year, compared to an average of 14 per cent.
38 per cent of organisations surveyed do not use any data quality software to protect their data asset, and of those that do over one third (31%) use it only for certain types of data. Not a single financial company surveyed said that it uses data quality software across the enterprise. In comparison, the telecoms sector was revealed as most likely to protect its data, with one third (33%) using software across the organisation.
The results show however that financial services companies understand the disadvantages of poor data quality, even if they are not yet doing anything about it. More than half (54%) said that improved data quality would give them a greater competitive edge, and nearly all the companies surveyed (92%) said their data has to comply with the Data Protection Act, with Basel II (62%), Sarbanes-Oxley (46%), and FSA (15%) regulations providing the financial services with a keen incentive to keep their data clean.
There are other reasons apart from compliance why the financial services companies surveyed rely so heavily on good quality data, says Datanomic. 69 per cent said that poor data quality has had a negative impact on the success of major IT implementations their company has put in place, and 82 per cent of government organisations, 66 per cent of telecoms companies, 64 per cent of manufacturing businesses and 90 per cent of retail, distribution and transport companies all agreed.
In contrast, the survey also showed that when the financial services get it right, the results can be impressive. 38 per cent said that implementing a data quality system has had a positive impact on the success of a major IT implementation, and more than half (54%) agreed that improved data quality would give them a greater competitive edge.
“This survey backs up what we have been seeing for a long time – that the financial services are aware that their data is not up to scratch and understand the risks this poses in terms of compliance and other business processes – yet many have yet to commit time and resources to addressing the issue,” says Laurie Mascott, CEO at Datanomic. “Also, in some cases vendors have delivered technical solutions to data quality that struggle to deliver tangible business value to non-technical data owners, thereby undermining confidence in further data quality investments. But companies who are in denial about their data quality are only exacerbating the problem, when actually the solution to poor data quality is very straightforward. For financial services companies in particular, a huge amount of confidential information is at stake. The cost of implementing data quality software is negligible compared to the benefits of successful large-scale IT projects, increased competitive edge and avoiding fines and damaged reputations for compliance failure. It’s time for businesses to realise that if they’re relying on data it needs to be right, and without proper monitoring in place this is extremely unlikely to be the case.”
Datanomic is a software company that sells data quality software systems that profile, audit, clean and match data with business-specific real-time error prevention and data compliance solutions.