Financial Data Supply Chain, Part 2: Integration as the Ultimate Weapon
In the second half of this blog series, Steve Engdahl explains how linking up each piece of the financial data supply chain can unlock greater efficiency and better risk management.
We’ve established that identifiers and communication standards form the foundation of the financial data supply chain. As the retail sector demonstrates, it’s integration that brings the supply chain to life.
In retail, common identification and communications standards enable the connections among all parties involved in the manufacturing, distribution, and sale of a physical product. The systems at each point of the chain automatically inform the others. As a result, the participants at any stage in the chain are able to take feedback from other points of the chain to inform their decisions.
This model breeds efficiency. It also breeds better risk management. For example, inventory data automatically alerts the retailer and triggers action at the manufacturing end before a supply/demand imbalance poses a threat, and before pallets and pallets of product sit gathering dust in the warehouse.
Similar to retail products, financial data is created, assembled, transformed, warehoused, and distributed in the course of being made available for risk analysis. But, in many cases, data is handled by each segment of the chain, passed on, and quickly forgotten. An integrated financial data supply chain creates efficiencies through automation, openness, standards, and communication across the data supply chain from source to use, rather than simply passing data on and out of sight.
In other words, the data supply chain gives banks sight of the data lineage -- where it comes from, what it means, who has handled it, where it needs to go, and how it is being used. With this level of insight, financial institutions can optimize the way they create, distribute, and consume data. Little goes to waste, and the quality of data that propels risk management processes, not just within firms but across the industry as well, is elevated.
As an industry, we’re well on our way: Between standards such as the LEI, utilities, such as those that are becoming established in the entity data space, and a renewed focus by most financial institutions on operational efficiency, the right elements are in place for a transformation in how we all conduct our business.Stephen Engdahl is senior VP of Product Strategy at GoldenSource. Steve is responsible for defining and articulating the company's global product strategy, aligning the company around opportunities to increase clients' value, product experience, and return on investment. View Full Bio