The Chief Data Officer plays multiple roles, being responsible for two main missions: enabling regulatory, digital and competition responsiveness on the one hand, and building and growing a data-driven culture on the other hand.

Regulatory, digital and competition responsiveness

Since the financial crisis of 2008, European banking regulation has undergone continuous evolution, requiring more and more granular data and information.

Banks are subject to additional reporting requirements on capital and liquidity and have further requirements on providing statistics to the CSSF, the Central Bank of Luxembourg (BCL) and the European Central Bank (ECB). Starting from FINREP, COREP, Anacredit, GDPR, BCBS 239, ESG risk information and upcoming AI regulations proposed by the European commission, the list still goes on. The Chief Data Officer plays a key role in dealing with this regulatory overload, by building and ensuring the bank’s capabilities to manage, control and correct information, allowing confidence in reported information.

Due to the negative interest rate environment since mid-2014/early 2015, banks face challenging macroeconomic conditions affecting their interest margins and profitability. Moreover, the continuing COVID-19 pandemic has stressed “digital transformation” needs more than ever. Additionally, with new players such as fintechs or neobanks, competition has increased, forcing banks to accelerate the development of their digital capabilities.

“Artificial Intelligence”, “Dark data”, “Cloud”, “Data virtualisation”, “Data marketplace”: these are all technology and capability trends currently in fashion. Beyond these “trendy” topics, the CDO is responsible for assessing whether they will bring value to the bank and its customers, whether data foundations are mature enough to support these tools before deciding if these technologies are worth the investment to gain either “quick wins” or to support long-term strategic goals.

Building and growing a data-driven culture

The CDO cannot handle all these topics and translate “data strategy” into concrete actions autonomously. He/she needs a clear sponsorship from the Executive Committee and a strong data and analytics team.

The CDO’s team builds and maintains the data foundations of the bank (data availability, data governance, data quality controls and corrections, system and data security and so on), enabling the bank to master data and information lifecycles, model how it is running its businesses and better assess its risks. Data foundation capabilities allow a bank to exploit information for regulatory, operational and strategic purposes. Once these capabilities are in place, a Datalab can be set up to explore the technology and capability trends mentioned previously. The goal of this Datalab is to explore new technologies, analytical models which may increase business efficiency, reduce costs and better assess risks. To facilitate communication with banking departments, data and analytics teams must have business, regulatory, tech and innovative skills.

Setting up a strong data and analytics team takes time and requires profiles that may not be directly available on the market. CDOs may need external support such as consultancy services to fill skill gaps and to bring specific experience. This can accelerate reaching data strategy objectives and increase the skillset of the data and analytics team.

The data-driven culture and resistance to change in the digital area are another key challenge. It should be addressed in the data strategy through “data evangelisation” actions to bring data confidence and to convince the biggest data consumers of the bank such as finance, risk and marketing departments, including how they can actually benefit from data capabilities to be put in place. The CDO must spend less time within the IT department and more time with business departments to gain an understanding of what they do and thus helping them to understand data.

The CDO builds the bridges between IT departments, business departments and project teams, breaking down silos, enabling value creation based on data and enabling departments to be responsive to regulatory requirements.

The mission of the Chief Data Officer is a long and rich journey in the banking industry. Successful implementation will improve employees and customer experience and help an organisation to leapfrog traditional and digital competition.

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