In capital markets, data can be an enormous source of value and efficiency for banks. Yet, many firms are still grappling with outdated data architectures and systems — particularly when it comes to middle- and back-office functions.

These legacy systems not only hinder operational efficiency but also introduce a multitude of challenges for the internal teams that rely on them to perform critical functions. For example, without tools to aggregate or normalize data at scale, operations or treasury teams may find themselves cobbling together information from multiple systems to produce reports. Unstructured data and manual workflows can also further exacerbate the problem, turning what should be a strategic asset into a cumbersome process.

Data quality is another consideration as manual processes can be prone to error. These issues can lead to operational delays or opportunity costs, as employees may spend valuable time correcting inaccuracies and reconciling discrepancies instead of focusing on core business activities.

Given the scarcity of time and talent resources, upgrading or replacing legacy infrastructure with a more modern data architecture and cloud-native tools can help firms gain agility and scale. By embracing improved technology, banks can empower their teams to collaborate more effectively, work more efficiently, and better support informed decision-making to drive growth.

Foundational data considerations

Developing teams that are digital and data-driven doesn’t just happen by chance. It takes careful preparation and implementation of modern systems aligned to the bank’s business objectives. To support your firm in your data journey, here are some key factors to keep in mind to establish a solid foundation.

Modern data platform

A crucial method for enabling teams to embrace data-driven practices is by implementing a unified system that allows for a reliable source of information. Modern data platforms designed to ingest, validate, analyze, and distribute data into the core of a firm's operations can help offer a solution. Data platforms can have a wide variety of architectures and be leveraged in different ways depending on governance structures. These systems also offer opportunity to modernize to the cloud, enabling scalable and flexible data storage and processing capabilities. Leveraging cloud infrastructure alleviates the burden from an IT team needing to manage and support hardware such as servers and supports cost savings.

Governance frameworks

For large institutions, the sheer volume, variety, and velocity of data generated can be complex and challenging to manage. A governance layer is critical to efficiently empowering end-users and enabling them with high-quality data. As such, firms must ensure their infrastructure and platforms offer the ability to incorporate critical governance elements such as data cataloging, quality control, security and access, and versioning frameworks into their data environment.

Self-service options  

For firms to get up to speed on any new technology, it is essential that the system or tools be self-serviceable to some degree. The first step is to get all necessary data in a central location and enable downstream analytics and reporting.

Doing this means sourcing the data from various locations and piping into a repository, commonly achieved through data pipelines. Creating data pipelines using either SQL or Python are both viable options where technical team members can customize them to solve for any use case. For non-technical folks, a low-code or no-code approach is also an available option, featuring predefined metadata and calculations such as IRR accessible from a drop-down menu. In this case, the system can take in the data and run the calculation without any code being written. 

Benefits for teams

Empowering teams with better access to high-quality data can transform the way they operate, enabling more informed decision-making and increased efficiency. Here are some of the advantages to an organization.

Enhanced reporting, analytics, and distribution

Whether it’s to fulfill internal needs, regulatory requirements, or client requests, reporting is crucial for banks and sell-side institutions. With data aggregated and consolidated through an integrated platform, teams are better positioned to move away from traditional spreadsheets or outdated databases and fully leverage the value of their data through self-service analytics and reporting tools. The incorporation of low-code capabilities further empowers teams to maximize data usage, as users don’t necessarily need a data science or technology background to access reporting capabilities.

360-degree view of risks

Access to a broader variety of data can also broaden insights, enabling treasury, operations and other internal teams to assess risk from multiple angles. Unified data platforms and governance foster cross-departmental collaboration which contributes to more cohesive strategies across risk, capital liquidity, treasury, and operational resiliency.

Greater efficiency

With a modern data infrastructure, firms can position themselves to significantly reduce the time required to analyze disparate datasets and systems, helping to improve overall operational efficiency. Structured data is designed to ensure more accurate end results, minimizing the risk of bad data being used in downstream processes. Furthermore, an audit history for data can provide a comprehensive line of troubleshooting from inception to result, allowing teams to quickly identify and address inaccuracies. These platform elements can help streamline workflows, enabling teams to focus on higher-value tasks and drive overall productivity.

Data-driven culture

With data structured and governed in a way for cross-departmental collaboration, firms have an important building block to fostering a culture of innovation and continuous improvement. This enables opportunity for more data-driven decisions, and when employees have consistent access to reliable data, they are empowered to explore new solutions and make data-driven recommendations, benefiting the firm.

Driving forward

While the value chain for data initiatives can be complex, the potential impact for firms and the benefits to their teams can make the journey worthwhile. Lastly, firms don’t have to be left to navigate their data journey alone. Many may even choose to buy from a strategic partner or third party, in addition to building solutions in-house. Reach out here to learn about the difference Arcesium can make for your business.