In the fast-evolving finance landscape, data has emerged as a critical asset, particularly for banks navigating the increasingly complex terrain of regulatory demands. In the U.S., banking regulations have grown in scope and stringency over recent years, with the American Bankers Association (ABA) conference in New York City highlighting this trend. The event's theme underscored the widespread impact of regulatory pressure on the banking industry—a trend that continues to reshape the sector in notable ways.
While these regulations aim to enhance the security and stability of financial systems, they often place a significant burden on banks, particularly smaller regional and community institutions. As a result, the pressure to comply with multifaceted requirements has driven several banking associations, representing both large and small banks, into ongoing litigation against regulatory bodies. Despite the intent behind these regulations, the burden they impose has, in many cases, impeded banks’ ability to innovate and compete, especially in a market where non-banking financial institutions now hold an increasing share of loans without the regulatory burden. Non-banks now own almost 80% of residential loans, for instance.
This growing compliance load has challenged banks to find new pathways for differentiation and value creation. This is where data can come in. Utilized to its fullest extent, data can become a core asset. Effective data utilization can be transformative—not only for compliance but also as a competitive lever, enabling banks to stay agile, informed and customer-centric. By harnessing data strategically, banks can reclaim autonomy in their business models, sharpening their competitive edge in a market that’s increasingly hostile to traditional banking.
The Challenge: A Data Confidence Crisis
One of the biggest hurdles in leveraging data effectively stems from a lack of confidence in data accuracy and accessibility. According to a January 2024 article in the Journal of Accountancy, almost 40% of CFOs globally lack complete trust in the accuracy of their organization’s financial data. This distrust is compounded by issues in data accessibility; many CFOs have limited visibility into their data, facing substantial delays due to fragmented data sources. These challenges result in CFOs and their teams spending excessive time compiling and summarizing data rather than performing in-depth analysis.
For financial institutions, this challenge is intensified by the unique nature of banking data. Banking data is deeply specialized, requiring domain-aware software that can navigate regulatory requirements and sector-specific nuances. Unfortunately, this type of software is often either lacking or underdeveloped. When banking data management is inefficient or incomplete, it drains resources and limits the insights CFOs and their teams can derive, thereby hindering the bank's ability to respond effectively to market and regulatory changes.
A Path Forward: Best Practices for Harnessing Data
To address these challenges, financial institutions must adopt a proactive approach to data management, grounded in both robust processes and the right technology solutions. Here are some best practices to consider:
- Centralized Data Platforms
A centralized data platform consolidates disparate data sources, allowing banks to eliminate the silos that complicate data visibility and trust. This setup reduces the time CFOs spend gathering and cleaning data, freeing up resources to focus on strategic initiatives. By having a single, unified view of financial data, banks can make timelier, more accurate decisions, improving both compliance and competitiveness.
- Domain-Specific Software Solutions
General data platforms often fail to capture the specialized needs of financial institutions. Choosing a domain-aware software solution can significantly improve a bank’s ability to understand its unique data. Such platforms are designed to recognize the nuances of banking data, making it easier to manage, analyze and interpret for decision-making that aligns with the bank’s regulatory and strategic priorities.
- Real-Time Data Analysis
Real-time data capabilities are increasingly essential for banks to stay ahead of regulatory and market shifts. With real-time data analysis, CFOs and their teams can detect trends, risks, and opportunities as they emerge, rather than relying on historical data alone. This ability can enable banks to pivot faster, make more informed decisions and even anticipate regulatory compliance needs before they become critical issues.
- Data Governance and Quality Assurance
Trust in data quality begins with strong data governance practices. Establishing clear protocols for data collection, validation and auditing is essential. By ensuring data accuracy from the outset, banks can build greater confidence in their data-driven decisions, helping CFOs and their teams focus on analysis rather than remediation.
- Empowering Teams with Self-Service Data Tools
Empowering finance teams with user-friendly, self-service data tools enhances productivity and reduces dependency on data specialists. These tools allow non-technical staff to extract insights independently, streamlining the data analysis process and enhancing decision-making agility.
The Bottom Line: Embrace Data as a Differentiator
In an era of intensifying regulatory pressures, banks can no longer afford to view data management as a back-office function. Instead, it must be embraced as a core differentiator, capable of enabling strategic advantage and operational resilience. With effective data management, banks—large and small—can unlock valuable insights, streamline compliance and redefine their business models to meet the demands of a complex, competitive landscape.
Explore how your financial institution can leverage data for competitive advantage with the SS&C EVOLV Finance Hub. Discover how we can help streamline compliance, drive insights and support your strategic growth in an increasingly regulated environment.
