Growing need for Reference Data Management
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Some seven years back, reference data was considered at least priority in the data world. Mounting competition and growing legal & regulatory requirements turned Reference Data Management into high priority for firms. Firms have started recognizing the benefits of accurate, update-to-date and easy accessible reference date to facilitate their business requirements and deliver best output with highest efficiency and productivity. There was a survey conducted by a US-based company to review the growing demand for reference data management. The key findings were:
- Initiative to improve Reference Data Management - 95% of the firms are planning to enhance their efforts and almost all the firms are initiating projects related to Reference data management.
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Centralization & Standardization of database – Firm are realizing the importance of having a centralized and standardized database. The key areas where this will impact are; cost efficiency, trade risk, client reporting, competitive advantage, transparency, compliance & financial regulations etc. 89% of survey respondents believe that centralized management structure is the best way to produce high quality of reference data. Cross-referencing of their firm’s reference data is considered to be very hard & difficult by almost 76% of the respondents.
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Data cleansing, enrichment & acquisition – About 33% have the best practice of data enrichment, 43% of data cleansing and 62% rely on data acquisition. Lack of data Standardization, existence of data silos, poor data quality, multi-source management and high implementation cost are some of the major obstacles that make reference data harder to manage.
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Outsourcing as viable option for improved RDM – Firms started considering outsourcing as the best option for an effective RDM. Survey shows 59% f the respondents agree that effective outsourced Reference data solution will help the industry. However till date, data protection is a major concern.
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Outsource to commercial players – There has been openness towards outsourcing RDM projects to private commercial player. A third party vendor will provide specialized services, cost effective solutions, and higher quality of data and timely availability of data.
After 9/11, regulatory agencies have stringent laws for firms to control money laundering and other illegal activities. From national security perspective, it is important that there should be a transparency of the customers to whom firms are dealing in terms of customer business, origin, business locations etc. MiFID, Basel-II & KYCS directive has also created necessities of having well managed reference data management systems to satisfy norms set by these laws.
Global economic crisis highlights that non-visibility and control over key data and information element in the global and complex environment has led to executives making ill-informed decisions have resulted in the the meltdown of financial system. Authorities are already proposing new regulations to the financial service industries including new data governance and compliance. More M&A’s among firms to sustain recession will impact more requirements for maintaining data chaos in the data consolidation and integration processes within firms.
Overall, the growth that has been seen is just the beginning of the massive business opportunity lying ahead. There will be great demand for the Reference data solution provider having innovating ideas, expertise and domain knowledge.