Since Biden’s inauguration in January, there’s been a shift toward greater regulation for the financial services sector – as is usually the case with Democratic administrations.
But regardless of who’s in office, regulations change. They adapt to new trends, threats, and technologies – and they require financial institutions to keep up.
The good news? Introducing data governance best practices can make it much easier for financial institutions to comply with regulations and adapt as new ones are introduced. Let’s take a look at how.
Background: Banking Regulations on the Horizon in 2021
Before we get into how data governance can position financial institutions to adapt more quickly to new regulations, let’s take a quick look at some potential regulatory updates on the horizon:
Of course, these are just three of many regulatory updates that might happen in the near future. With adequate data governance in place, these and others can be much less burdensome.
How Data Governance Facilitates Compliance by Bringing Unity and Quality to Financial Institutions’ Data
Data governance involves bringing all of an organization’s data into a single place – a “single source of truth,” we call it – and ensuring that it all exists in a standard format. By doing this, an organization also improves the quality of its data and therefore its trustworthiness.
Let’s look at an example.
Imagine a regional bank that has customer information stored for a person who has checking and savings accounts. Their information is stored in the format “last name, first name” – the standard practice for that bank.
But then the bank merges with another regional bank. That same customer has an auto loan with the other bank, but the second bank stores their information in the format “first name, middle name, last name.” Without data governance in place, these two files appear to represent two different people.
Now imagine this at scale: thousands of customers, each of whom might have their data stored in two or more places. Compliance with a rule that requires reporting how many customers were impacted by a security incident – within 36 hours of said incident – would be nearly impossible.
With data governance best practices in place, though, it would be much easier. The bank would be able to…
In addition, the organization could quickly notify affected customers about the incident and response. Because the financial institution can trust its data and quickly access information it needs, it can be agile when the unexpected happens or when circumstances change.
Another key compliance benefit: with data governance best practices in place, financial institutions know exactly where their customers’ data resides.
If a customer revokes consent for the institution to use their data in certain ways or asks that their data be deleted, the institution can quickly adapt. Without knowing where all data was located, the institution would struggle to meet such requests – and therefore unable to comply with CCPA and other state data privacy regulations.
The Many Benefits of Data Governance for Financial Institutions
Implementing data governance best practices is no small task, but it’s necessary for financial institutions that hope to be able to stay in compliance with constantly shifting regulations.
The good news is that implementing data governance benefits every part of the organization – not just its ability to comply with regulations. With cleaner data, financial institutions can…
For financial institutions without in-house experience implementing data governance, working with an experienced partner is the most efficient way to achieve data governance and enjoy the benefits it offers.
Regulation Is Constantly Evolving. Make Sure Your Data Can Keep Up
The regulatory environment for financial institutions is inherently tied to the politics of those currently in power. But it’s also affected by the constantly evolving realities of our constantly changing world. After all, nobody needed data breach laws before the era of digital information.
Financial institutions can stay in compliance with whatever regulations the future holds by ensuring that their data is standardized, unified, and easy to access.
If you’re interested in learning about what your organization’s journey to data governance might look like, get in touch. We’d love to help you down the path.