As new privacy regulations are implemented around the world, organizations need well-defined data governance strategies to ensure compliance.
Data governance deals with the policies and procedures that ensure accountability, accuracy, and security in all things data. It clearly defines who is responsible for which data, and ensures data is handled properly while being accessed, modified, archived, and deleted.
In setting a data governance strategy, companies have a choice to make:
- Apply compliance measures for countries with the strictest regulations across their entire operations.
- Take a piecemeal approach that accommodates regulatory differences from one country to another.
Using the most rigorous standard across the board may be straightforward, but it creates disadvantages. A company may deprive itself of access to some types of data it can use in one country because it is applying another country’s privacy standards to its governance.
Instead, it can choose a data management platform that makes it easy to comply with different regulations. As such, the company can drive value to the business while reducing risk so it doesn’t run afoul of privacy regulations. But for our purposes, let’s focus on two heavily regulated industries where governance is absolutely essential—financial services and insurance.
Both sectors are undergoing major transformation as they look to digitize processes and innovate their service offerings. And both sectors collect and store very sensitive information from customers—the type of data that governments around the world are becoming more and more serious about protecting.
The EU’s General Data Protection Regulation (GDPR) is a prime example, but not the only one. Strict privacy laws have gone into effect also in Canada, California, India, and South Africa. More countries, states, and regions are likely to follow suit. Having a policy in place that can address existing laws and accommodate new ones is a good strategy to have.
Financial services firms stand to extract substantial benefits from a properly executed data governance strategy. For one thing, it gives bricks-and-mortar firms a better chance to compete with companies that are strictly virtual. More importantly, they can add value for customers.
With the right controls and procedures in place, stakeholders can draw valuable insights about customer preferences and needs that can be turned into revenue-generating decisions.
Financial services firms need to up their game by leveraging hybrid cloud environments and taking advantage of the expansion of 5G, Internet of Things (IoT), and edge networks.
Combined with data analytics, these technologies make it possible for financial institutions to better get to know their customers. This will enable capabilities such as quick verification of customer identities and credit worthiness to accelerate the approval process for loans and lines of credit.
As such, financial services firms have a real opportunity to drive innovation and enhance customer service through digital transformation. To do it successfully, companies need to know what data they have and what it means, and make it more widely available inside the organization. But it must be done in a safe and compliant manner so the organization can demonstrate compliance.
Much like financial services, the insurance sector is in the midst of profound change. By leveraging data platforms and machine learning, for instance, insurers can monitor driving behavior in connected cars to generate scoring models, pricing algorithms and crash alerts in order to improve driver habits and reduce claims.
Insurers, too, collect lots of confidential information from customers that enables innovation but also triggers the need to be super vigilant about privacy and cybersecurity. By investing in data analytics and modern data architecture technologies, insurers can deliver tailored products or self-service offerings to customers and provide quotes more quickly and satisfactorily.
Insurers also have to comply with regulations such as GDPR and they need to prepare for IFRS 17, a new International Financial Reporting Standard scheduled to take effect in January 2023. The standard “provides consistent principles for all aspects of accounting for insurance contracts. It removes existing inconsistencies and enables investors, analysts and others to meaningfully compare companies, contracts and industries.”
Proper data governance can help insurers with successful digital transformation while maintaining compliance with regulations and standards such as IFRS 17.
Whether in financial services or insurance, effective data governance helps companies unlock value, increase innovation and reduce risk.
To achieve all of these goals, here are seven tips to follow:
Run an inventory of all the data an organization has, creates, and uses.
Apply a consistent standard across all of the data being governed.
Identify data owners and assign responsibilities.
Identify sensitive data that requires added protection.
Implement well-defined measures to comply with relevant privacy regulations.
Set metrics to keep track of successes and identify areas needing improvement.
Review data governance protocols and make adjustments as needed.
A data governance strategy for organizations in insurance and financial services is a must. The more effective it is, the better a company can position itself to innovate and differentiate while also building trust by using data in line with relevant regulations.
Explore the data governance roadmap for enterprises to learn more.
Monique brings insight and expertise in both business leadership and data strategy to her role at Cloudera, where she works with insurance clients to optimize their use of data, analytics, and machine learning across the enterprise. Monique’s career has primarily been in business leadership and data and analytics roles in insurance, working for companies including AON, Chubb, Mutual of Omaha, and Zurich Financial Services.
Joe advises financial institutions and financial services firms on their data and analytics strategy to drive improved business results. Prior to Cloudera Joe was COO of Operations IT and Head of Transformation at Morgan Stanley. Throughout his career Joe has worked in various senior leadership roles for Bank of America, the Federal Reserve, HSBC, Credit Suisse, Merrill Lynch and JPMorgan.