The finance industry is actively looking to harness the insights from several data sources but existing limitations within their IT infrastructure. A new industry standard intends to make it easier for financial services businesses to manage data in the cloud, opening the potential to a surge of new service and product development.
Cloud services facilitate the technical efforts of sharing data by moving the responsibility for developing, securing and maintaining information to cloud-managed service providers. Up until now, the finance industry has had very few ways to verify that cloud providers can meet their strict requirements in terms of governance and security. The new CDMC standard, announced by the EDM Council, focuses specifically on these concerns.
The CDMC delivers a set of measures to ensure cloud environments meet the security and governance required for regulated industries like finance. The standard was developed by a working group in collaboration with Morgan Stanley, Refinitiv and over 20 financial institution leaders and cloud providers. The standard goes beyond data sharing and explores the needs of financial services businesses as they shift their operations into the cloud. Data remains an important area where finance businesses can improve their response to customer requirements. A standard that supports their transition to the cloud will only enhance their capacity to digest and share data with a wide range of customers.
Traditionally, data feeds going in and out have typically been custom created and managed individually. Finance businesses are under growing pressure to innovate and deliver enhanced services due to the growing number of new fintech companies, but they are attempting this with certain limitations.
Cloud data platforms handle this challenge by managing the technical complications of sharing and securing data within a business. Cloud providers must display their following to the new standard via an independent group.
CDMC presents several opportunities by accelerating the rate finance businesses can transfer their operations to the cloud. A vital result of this is the potential to apply financial data from various silos, enabling companies to create new revenue streams through innovative products and work together across the new data economy. Multiple data sources translate into easier access and sharing of data between teams and the wider business. Aside from that, it enables the entire industry to be more connected and share data in innovative ways with customers and their partners.
Tackling fraud is a particular challenge, especially as every financially related business is trying to combat this problem by using their data. With the potential to utilise data from multiple sources and the ability to explore activity in banks and payment processors, there’s a lot more potential to identify and tackle fraud.
This model has worked for the security industry, where trusted providers explore activity across participating businesses to detect threats. With a structured system enabling financial data to share in the cloud, a new wave of service providers can handle the pressure of detecting fraud for financial businesses and likely do it more effectively than before. This system requires considerable collaboration, but the CDMC has created the foundations of trust for these services to be delivered.
Another area where data sharing in the cloud can play a significant role is in ESG. Businesses that manage pensions and sovereign wealth funds are under growing pressure to ensure investments meet ethical and environmental criteria that are constantly requested by investors and regulators.
Defining whether a fund has a positive environmental score or performs business ethically can be challenging to determine. Third-party providers are capable of consolidating this information and effectively creating an authoritative voice for the industry. The CDMC standard applies a similar baseline of trust to ensure shared data services are available.
These are examples of how data sharing in the cloud can enable finance businesses to transfer their focus from developing varied IT services towards an innovative system that focuses on progress and remaining competitive. There is a range of third party data providers available in the cloud that can improve predictive analytics and generate a more personalised customer service.
Combining this data can enable finance businesses to improve their predictive analytics and deliver a more bespoke service to their customers, but this requires a relatively seamless data process. Managed cloud services simplify this process, and the CDMC represents a vital step in delivering a more efficient cloud migration system for the finance industry.