Organizations today require an even greater ability to access, analyze and parse data at their discretion to create an accurate picture of the information housed within their institutions. Questions IT leaders must ask themselves include: is there an efficient and cost effective way to report using real-time data while simultaneously ensuring compliancy, and do they have a better understanding of the risks surrounding their data going forward?
Financial institutions under constant scrutiny
It’s well-established that the financial services industry is continuing to face scrutiny from regulatory compliance agencies. But what might not be as obvious – and yet is ultimately more significant — is that many financial institutions have also been forced to re-evaluate their technological infrastructure investments and data storage strategies, to find innovative new ways to recover lost profits and move further into the black.
In order to create a reporting environment that satisfies regulatory benchmarks, banking and financial organizations have typically aggregated information in data warehouses. However, those centralized repositories are expensive to maintain and require numerous staff to support. They also present challenges to accessing data that result in delays and by the time data is retrieved, it is often already outdated.
New compliance regulations
Following the financial crash of 2008, organizations hope to find a way to recover lost profits and get into the black by re-evaluating and implementing new data storage strategies. Prior to the crash, many financial services institution’s business models included selling high-value products. However, after 2008, regulatory agencies prohibited the sales of many of these products, whilst also imposing new compliance regulations that were costly to implement and maintain.
In need of a new approach
In 2016, eight years after the stock market crash of 2008, financial services organizations still face strong pressure from regulatory agencies to stay compliant and secure, often facing higher financial penalties for non-compliance than a decade prior. In the U.S., legislation could potentially cost financial institutions anywhere from tens of millions to upwards of a billion dollars if found in non-compliance. In Europe, EU regulations also have the potential to fine organizations up to four percent of their company’s global gross revenue. The combination of compliance costs coupled with loss of income from product sales represented a perfect storm for the industry. As a result, financial firms have struggled to maintain revenue and profit margins, and organizations that maintained business operations often did so with a fraction of their income.
In order to redress the balance, many organizations found that they now require an entirely new approach to storing and accessing real-time data. In my next blog, I’ll discuss solutions the financial services industry has turned to that address those very challenges.