Sometimes a financial firm has the foresight to establish the job of a chief data officer, who can help lead the business through today’s turbulent and risky times.
The rest of you just blunder through these turbulent and risky times anyway, and then wish your CEO and board had the same foresight as those other firms down the street with their data officers. So let’s talk about what these people do, since they are becoming indispensable.
After all, much of what a financial firm does today is worry about data. Traders worry whether they have enough of it. Accounting staff worry whether they have an accurate version of it. Legal worries that someone is abusing it, while the IT staff worry that someone has stolen it. Compliance worries that everyone is handling it the right way, before regulators come asking for a copy of it.
It makes sense, then, to consider hiring a chief data officer. A fair number of large firms have already done this, but overall, a dedicated, full-time chief data officer is still unusual. I searched “chief data officer” on LinkedIn, within the financial services, investment banking, commercial banking, and insurance industries. Total results: 306 people.
The good news is that many financial firms do have people performing the same job under different titles; expand your search to the broader category of “data governance,” and those same four industries return 8,000 results. So we are not hopelessly lost here.
What should a chief data officer do? At a high level, the answer is “oversee how data is managed at your firm”—but that’s the vague answer that boards and senior executives give. We here in the weeds of daily operation can be more specific:
- Oversee how employees use data;
- Monitor how data flows through the enterprise;
- Ensure the availability of data;
- Ensure the accuracy of data;
- Help with the creation of data usage policies;
- Other (you always have to include “other” in job descriptions).
In a perfect world, the chief data officer would have one lieutenant for each of those points. Here in the real world of tight staffing budgets, a company often assigns those tasks to other parts of the organization. Data availability, for example, often goes to the IT department; data usage policies are often drafted by the compliance and legal departments.
The practical upshot: in addition to the technical skills a chief data officer needs, he or she must know how to work well with other departments in firm to set up work-flow processes, understand cybersecurity or regulatory requirements, and so forth.
Why Financial Services, and Why Now?
Someone filling the chief data officer role (whatever his or her exact title might be) is urgent for financial firms today because we are at several tipping points, where better governance of your data is critical if you hope to survive the modern regulatory world.
For example, today you can read an article in the Financial Times about Deutsche Bank trying to streamline its IT operations. That sounds like a wise move: the bank has 4,400 different systems right now, and proliferation of IT systems and applications is a prime way to get into regulatory trouble—simply because senior executives don’t really know what’s going on in the business. So DB’s new head of operations wants to reduce those 4,400 systems dramatically.
Simplifying systems is a good idea, but someone needs to be in the room advocating for your firm to think about data, too. If a firm ignores that pesky question, employees will just find new ways to manage data themselves, and that is the nightmare scenario for compliance officers. Kiss your understanding of firm-wide risks and controls goodbye, once employees stop believing that senior managers (which includes you) want to help them do their jobs.
Can compliance officers fulfill that same role of a chief data officer, to pay heed to data usage in your firm? Possibly, depending on your technical skills and what your firm needs. A better question to ask is where do compliance and data governance interests intersect? Because you do have a lot of common interests, so even if your firm is a bit behind on data governance, a smart compliance officer can argue for those needs anyway and save yourself a world of potential headache.
One parting example: the other week we talked about a financial technology firm, whose COO warned about banks with jumbled IT systems. Employees could never easily pull up the data they needed, he said, so they created spreadsheets for themselves—the last thing a compliance officer wants to hear. Smoothing over data availability is what a chief data officer does; ensuring control over data is what a chief compliance officer does. Clearly you are natural allies, so let’s hope your firm sees it that way too.