The year 2018 will be one of the finance industry’s most disruptive and transformative periods.
Of course, you can expect the usual Industry 4.0 drivers. Industry disruption, technological innovation and new market entrants.
However, something else looms large over the next 12 months. Affecting the length and breadth of financial services. From data analysis and storage, to cyber security and good governance.
There’ll be the General Data Protection Regulation (GDPR), intended ‘to strengthen and unify data protection for all individuals within the European Union (EU)’.
Also the Markets In Financial Instruments Directive (MiFID II), conceived by the EU in the wake of the 2007/8 financial crisis.
Plus the EU Revised Payment Services Directive, applicable to all firms providing payment services.
Why the time is now
This overhaul is well overdue.
Current UK data laws are based on directives dating from 1995. One year before Google launched. Back when mobile phones were ‘brick’ rather than ‘smart’. A time when just 16 million people worldwide were dialling up noisy 56k modems and surfing something called ‘The Internet’.
The thing is, this regulatory revolution is happening during a unique era. Industry 4.0, the Fourth Industrial Revolution, call it what you want. This is an era when change – in the form of digital transformation – is the only constant.
This poses challenges specific to many financial institutions, with legacy IT systems to realise ROI from. Often coupled with out-of-date systems requiring patching from providers. Along with vast volumes of customer data, stored in various locations, formats, and structures.
IT at the heart of the regulatory revolution
It’s clear the industry knows what has to be done. The pressing question is around how to do it.
IT heads must solve challenges like:
- How do the new regulations affect my organisation’s cross-border strategies?
- Is my existing infrastructure capable of meeting the demand – from a bandwidth as well as regulatory perspective?
- Can my organisation easily carry out data protection impact assessments (DPIA) when implementing data processing systems that comply with regulation such as GDPR?
Data lineage as the panacea
The common thread running through all of the above is gaining visibility of data. Because transparency is a central tenet of the regulations. Governance, risk and auditing teams will need a platform enabling access to vast volumes of data – quickly. Along with tools for data lake creation, metadata management, data modelling, semantic access and mapping.
That’s why data lineage is so important. Giving data scientists visibility and veracity of data sources, pipeline and history. For scalability, these should be software-defined, hyperconverged, and offer cloud functionality. Whether that’s hybrid (to accommodate on-premises infrastructure) or 100% cloud.
Data quality and integrity
Getting data lineage right will also open the gates to a massive opportunity. To build consumer trust and brand loyalty. After all, customer experience is where the modern battle for business is being fought.
That’s why so many banks and insurers are partnering with transformation partners to deliver next-generation services, applications, and experiences. Those that make the right choice will reap the rewards during 2018 and beyond.
Want more stuff like this? Try the report below:
How financial institutions can build regulatory compliance platforms for Industry 4.0
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Industry report: How financial institutions can build regulatory compliance platforms for Industry 4.0
For senior executives who want to seize the opportunities of GDPR, PSD2 and other regulations.