Crunch Time – CDOs in the spotlight

By Nick Weisfeld | 22 January 2015

During the past 18 months there has been a mind-set shift within the investment banking community. Job titles are changing, the front office’s influence over decision-making is ceding as the power of the regulator rises. The result has been that Chief Data Officers (CDOs) have now been elevated to key positions of responsibility.

With increasingly board-mandated powers, CDOs have cross-silo responsibility to ensure that their organisations can leverage unprecedented amounts of data and are well placed to maximise the effectiveness of business and operational decisions.

According to a Gartner survey, within the next 12 months 1 in 4 of all global organisations will have a CDO. Deutsche Bank appointed their first CDO this October with enterprise-wide responsibilities to ensure data is ‘fit-for-purpose’ and can be leveraged across the entire organisation. However, at present most organisations do not have a point person responsible for data quality, integration, standards and metrics.

Data which is not ‘fit-for-purpose’ inevitably results in information that is inconsistent and cannot be trusted when making business decisions. The volume of data which is being generated today is reaching unprecedented levels. During the past two years around one zettabyte of information was generated, which is more than in all of history. To put a zettabyte into some form of context, it is the equivalent of about 250 billion DVDs! As organisations deal with greater amounts of data, the opportunities and challenges in dealing with the ‘data footprint’ of the entire firm are vast.

In recognition and response to this, the Basel Committee on Banking Supervision (BCBS) last year published BCBS239: Principles for Effective Data Aggregation and Risk Reporting, confirming that data quality and data lineage was firmly in the regulators’ sights.

During November’s CDO Summit, the Data Innovation Working Group brought together financial and non-financial CDOs and data experts to discuss the proposed impact of this regulation. The Working Group shared their thoughts and debated the key issues affecting CDOs, and the ways in which CDOs may approach the complex data issues banks are currently facing.

One of the most common data quality problems that the Working Group reported as having witnessed with clients is related to risk management reports and board level metrics. Regulators expect the quality of the data to be extremely high ensuring that high quality business decisions can be made by banks.

Regulators are increasingly assessing banks against their risk data aggregation and reporting principles. This means that banks must look towards improving the quality of their data and seek to understand the lineage of the data that will ultimately be used to make business decisions.

The Working Group also decided that market leaders should do more to streamline and manage data more effectively. In particular, using BCBS239 and other key regulations to streamline based on standard taxonomies. It will become increasingly important to ensure that the data available on non-compliant parts of the business is used to leverage the current understanding of data in the organisation.

One way of achieving this, is by creating visual representations of data. Such data can reveal information to a business that was previously unknown. This is important – using data to show gaps, problem areas or areas for opportunity will help organisations identify weak points and solutions much quicker.

Perhaps the key challenge facing CDOs in the early stages of their new role is how to implement cultural change within their organisations. How do they influence key stakeholders and raise the profile of data so that it is viewed as an asset to an organisation? The key lies in CDOs building a measurable business case for data and establishing appropriate metrics to measure performance. They need to demonstrate the benefits of having accessible, high quality, valuable data instantly available.

To achieve this, CDOs should introduce new governance structures that extend across an entire organisation, creating an environment in which cultural change can become a catalyst for the production of a high quality data.

Banks need to be encouraged to see data as a “fourth pillar”, alongside people, process and technology. Without this, attitudes to data won’t change.

The efficient and effective management of data is required not only to satisfy the regulator; but in today’s hypercompetitive business environment it can often mean the difference between success and failure. Data needs to be at the forefront of any change initiative, with commercially focused CDOs brought in to advise on strategy from the outset of programmes.

The Data Innovation Working group is looking to develop effective strategies and innovative solutions that will address the challenges faced by CDOs, allowing them to meet their objectives and achieve success in their roles.


By Nick Weisfeld, Head of Data Quality Practice, GFT

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