Globally, the private and public sector are experiencing unprecedented structural change. The threats from macro conditions including climate change, population growth, cyber security, geo-political changes and the rapid advancements in technology are the focus of discussions inside and out the boardroom. But does the greatest threat to governance come from within and from something as unsexy and unexciting as data?
The Hayne Royal Commission has thrown a spotlight on culture and the resulting impact to customer values. Organisations are urgently engaging human centred design specialists with a view to make processes value adding and customer centric. And the prevailing belief is that customers want to click as few times as possible.
This often means that organisations, in their attempt to satisfy customer accessibility are spending significant sums to create “portals” of data to improve the customer experience and unlock cross-sell on revenue. As an example, Macquarie bank with its data sharing partnership with Pocketbook is the market leader amongst the banks for open banking. This partnership allows customers to readily access their spending habits through a direct and secure API into their Macquarie account. Simply put, it enables customers the ability to manage their personal finances in one secure environment. But what does this have to do with data governance?
Melanie Becker, Principal at PeNa Consulting defines data governance as: The ecosystem of people, systems and processes which controls how data flows within an organisation and the rules that define who creates the data, who owns data, how sensitive it is, and who should have access to it.
In the Macquarie / Pocketbook example it raises questions around how and when data flows between the bank and Pocketbook and what security standards are in place to ensure this doesn’t become a cyber threat. However, the risks and challenges increase incrementally when we start to want to blend our banking data with, for example, our mortgage information from our broker.
Here you link change in the first sentence with governance in the last one, you link challenges such as geo politics and climate change with data. It feels a little bit far fetched. As if there was some more obvious link missing?
There here one needs to assume this is somehow linked to the data or the challenges but it’s not obvious neither, maybe another link wouldn’t hurt.
Ms Becker says “In many ways data governance epitomises the key challenge of corporate governance as a whole – who is accountable and at what point in time?”
The reality is that most organisations have tens if not hundreds of legacy systems that were poorly designed with little or no consideration for MDM, data architecture and data stewardship which in turn has resulted in poor data quality. This poses a significant challenge to organisations because in order to provide customers with the utopia of a “one stop shop” they are being challenged to resolve data quality challenges that were not an issue when systems were being accessed individually.
This challenge is made even greater when data governance, and specifically data quality is considered to be the job of the IT department. And herein lies the single biggest failures in good data governance – the immaturity of organisations to address data stewardship and the understanding that without there being clear business accountability for the ownership and ongoing management of data and how it flows through an organisation – rubbish in rubbish out!
But as organisations drive towards creating portals of value which provide customers with deeper and broader access to their data, this creates the potential for exposing poor and /or inaccurate data and or information directly to customers which is likely to significantly damage reputation. In other words if Bank ABC were to partner with Mortgage Broker XYZ and expose inaccurate data to the incorrect customer – who is liable for this security breach? The Bank or the Mortgage Broker – or both?
This is a significant risk to executives and boards in a world where the focus is on rapid and agile automation and less and less on the painstaking and costly manual work of data cleansing. However, boards would be well advised to ensure that their organisations have programs in place to monitor and measure data governance across their supply chain and that sums of money are allocated to ensuring vendor agreements clearly outline data governance arrangements and data cleansing activities.
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