Making the Most of Your Data Strategy: Key Investments and Priorities in Q2 2022

Making the Most of Your Data StrategyOn May 24, Aite-Novarica Group hosted our third quarterly Financial Services CIO/CTO Advisory Research Council meeting. 18 CIOs, CTOs, and heads of architecture at banks and financial institutions attended the meeting, which centered on data strategy priorities and initiatives.

Data strategy is a crucial component of banking and financial services IT leaders’ top priorities for 2022. Our Q2 study results, found in CIO/CTO Checklist: Best Practices for Developing a Data Strategy and Data Architecture, indicate that Research Council members view it as a tool to achieve and maintain regulatory compliance, security, and greater agility to react to customer needs, among other competitive differentiators.

The Research Council meeting revealed executives’ three main areas of focus this year: attracting and retaining data talent, establishing clear ownership of data strategy, and navigating the risks and rewards of APIs.

Data Resource Shortage Results in Creative Talent Solutions

The financial services industry is employing increasingly creative strategies to attract and retain data talent due to the shortage of experienced data scientists and engineers. Research Council members were in consensus that entry-level roles are currently the easiest data resources to hire. Hiring interns from universities and graduating them into employees continues to yield positive results, but already experienced data engineers are challenging to find.

As new forms of technology emerge, some financial institutions have found it worthwhile to upskill their existing teams and have employees trade off working on different platforms. Once those employees are trained, they can move into data roles in other areas of the organization.

The changing tides of the labor market have made it impossible for organizations to rely solely on individual roles or resources. Rather than having individual data engineers build specific integrations, delegating tasks across a team of contributors can help reduce the risk of sudden loss of institutional knowledge.

Some institutions have resorted to outsourcing and having consultants assist with building data integrations. Once built, in-house resources take over maintenance and use. While data analysis is challenging to outsource, this model can help smaller organizations develop a well-rounded internal team.

Challenges Defining a Model for IT and Business Data Ownership Roles

Resource availability is a contributing factor, but it is not the only obstacle to achieving clear ownership of data strategy. Legacy systems can mean that data is stored in different places and is difficult to access.

A history of silos can lead to enterprise and departmental roadmaps that prioritize different goals or even contradict each other. Business units can struggle to understand their responsibility with regards to data stewardship. All these factors can further complicate an already immense task.

Creating a data governance council with representation from various areas of the organization, led by a chief data officer, can help facilitate communication about current challenges and keep everyone on the same page about ownership.

That said, Aite-Novarica’s Q2 data strategy study demonstrates that most banks and financial institutions view their data governance program as a work in progress. Enabling the business side of the organization to better comprehend its role in the data ownership scheme remains a particular challenge for many executives.

Risks and Rewards of Using APIs for Interchanging Data

Some financial institutions have had success with interchanging data using APIs, but others have shied away from doing so. Modern customer expectations encourage financial institutions to offer the opportunity to integrate directly. However, some executives expressed concern about the potential security risk posed by open APIs.

The key issue surrounding open APIs is transaction scalability—if every transaction is illustrated the same way at the same time, it needs to be possible to authenticate them in a way that creates trust but doesn’t create a scaling issue.

Since API technology has not yet advanced enough to fully meet the needs and objectives of banks and financial institutions, the risks and rewards of using APIs for interchanging data remain topical to CIOs, CTOs, and heads of architecture. While the financial services world is developing ways to secure and control APIs, this is an ongoing process.

Other goals such as APIs embedded into an ERP system remain more theory than reality for now. Due to the time, expense, and current challenges surrounding API integrations, Research Council members had mixed feelings surrounding APIs. One participant summarized his thoughts by saying, “While there are many use cases relevant to APIs, there are a number of others where APIs are probably not the right answer in terms of interacting with customers.”

How You Can Get Involved

The agenda of each quarterly meeting is driven by Research Council members’ interests and priorities. Next quarter, we’ll be discussing digital transformation best practices.

Research Council members get free access to a subset of the new research we deliver to IT executives who join our new Financial Services CIO/CTO Advisory practice.

Interested in learning more about how our strategic insights can help you advance your organization’s maturity in using data to make smarter, more informed business decisions?

Reserve your seat on our Research Council! >> Email me at [email protected], and I’ll reach out to schedule an introductory conversation about the Council and our FS CIO/CTO Advisory Practice.

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