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The Evolving Role of the Chief Data Officer in Financial Services

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The Evolving Role of the Chief Data Officer in Financial Services The evolving role of the chief data officer in financial services: From marshal and steward to business strategist The evolving role of the chief data officer in financial services | From marshal and steward to business strategist The evolving role of the chief data officer in financial services: From marshal and steward to business strategist Over the past few years, financial institutions core businesses, products, customers, and (FIs) have increasingly come to recognize supporting data infrastructure’s capabilities that their data assets represent highly and needs. strategic sources of insight and leverage for a wide array of business functions, More recently, the CDO’s job description–for including risk management, regulatory the most progressive organizations–has compliance, sales and marketing, product evolved from its initial focus on data asset development, and operational performance, gathering, governance, and stewardship among others. To realize this embedded to proactive business enablement, with value, however, organizations need to many institutions even marrying the CDO proactively and effectively manage their and chief analytics officer (CAO) roles into a information assets at the enterprise level. In single senior-level position. This is especially response, they have been appointing chief true for organizations that aggressively data officers (CDOs) to provide required seek to leverage data science and advanced strategic guidance and execution support, analytical modelling to generate new insights and also to assure access to and the into the markets and customers they serve, quality of critical data. In addition, CDOs the products they build and price, the risks will undoubtedly play a strategic role in they assume or pass on, and the means by helping FIs adapt and transform their data which they operate the business to benefit ecosystems in response to rapid technology stakeholders. Organizations today need innovation in digital, mobile payments, Big senior leaders to not only manage and Data management, advanced analytics, govern the data, but also to leverage the blockchain, robotics, cognitive learning, data using emerging technologies that can and automation. This report explores the generate actionable analytical insights and evolving role of CDOs in the global FSI–from tangible business benefits. senior data marshal and steward to strategic business-enablement leader and innovator. For most FIs, a huge amount of work in the data space remains to be done–especially Wanted: Executives to protect and in the face of new and emerging technology create value from data assets innovations, and regulatory changes around One might argue that the role of CDO really data reporting and data privacy, for which came into vogue in the aftermath of the traditional management strategies and 2008 global financial crisis. The need was approaches may be less than well-suited. In clear: Too little attention had been paid by view of such external forces and dimensions, most institutions to their data, which, some the role of the CDO in financial services believe, if managed more effectively, might should continue to expand in both influence have provided an advance warning of the and value. This is particularly important forthcoming meltdown–or, at a minimum, as corporate boards and executive teams a more resilient response. A senior, C-level increasingly appreciate the need for–and executive was needed to marshal and empower and fund–transformation of govern critical data assets–someone with a their businesses into information-centric, balanced understanding of the institution’s analytics-driven, and agile data consumers. 02 The evolving role of the chief data officer in financial services | From marshal and steward to business strategist CIO, CDO, CAO…what’s the difference today? A cursory examination of a typical FI organizational chart reveals the existence of numerous, data-centric or sensitive C-level positions as shown in Figure 1. So, it’s important to know how these roles differ from the CDO position. Figure 1—Overview of data-driven roles What’s the difference Chief Information Officer Chief Data Officer Chief Digital Officer Chief Analytics Officer Technologist Scientist Innovator Strategist What they do: What they do: What they do: What they do: • Focus on building an inter- • Lead the data and analytics • Deliver in-depth insights • Assess the most connected technology agenda of an organization into the end-to–end appropriate operating ecosystem by assessing journeys of customers, model and data • Establish and deliver and mapping the linkages supply chains, employees monetization approach for technologies, tools, between different arms of and how they can be the business the business approaches and improved using digital methodologies to unlock technology • Define and drive the • Assess and invest in the value in enterprise data enterprise-wide analytics enterprise-wide platforms assets of an organization • Have a strong vision across strategy, and licences, such as understanding of how to people, process, data and • Manage data as a strategic visualization tools migrate traditional technology asset and operationalize processes and systems to • Control complex multi- data governance, data cater for mobility, social • Be heavily involved in the sourced vendor quality and other controls media, sensors and so forth business transformation, environments, mitigate SLA to sustain the integrity of change and education failures, outage risks and the data of an organization • Have a natural leaning needed to embed analytics optimize services toward innovation and into the culture to become • Serve as trusted partner to development, including the insight-driven • Redefine IT by working key business executives ability to teach and inspire closely with other CxOs to focused on the customer, other stakeholders in the • Remain at the cutting edge embed scalable technology enterprise risk organization of data developments and into all approaches management, regulatory risks and drive future compliance and finance • Able to take the insight programs for the organization on a digital organization • Fosters innovation transformative journey both leveraging emerging Big internally and externally Data and analytics technologies 03 The evolving role of the chief data officer in financial services | From marshal and steward to business strategist CDO holds the keys to unlock value regularly educating and updating the rest of Data–of all shapes, formats and types–has the organization, beginning with the board quickly become the FI’s most strategic asset; of directors and fellow C-suite executives, one that continues to grow exponentially and working down the chain of command. in volume, variety and complexity. Just like other crucial corporate holdings, data Major influencers: Industry, market, requires appropriate levels of stewardship and organizational maturity and governance to ensure that its Today, more than 25 percent of Fortune underlying value can be understood and 500 companies maintain a CDO position. realized. The CDO is the executive who Typically, these data leaders serve their holds the keys to help an organization both organizations across one or more of protect and unlock the full value of its data four key dimensions, as identified in assets. Figure 2–Catalyst, strategist, technologist and/or operator. That said, however, it The CDO builds and oversees a data should be acknowledged that multiple strategy and set of competencies that work factors–including industry, market in concert to enable information sharing, and organizational maturity–may collaboration, compliance and security, and strongly influence a given CDO’s specific efficient resource management to support responsibilities, reach, and impact. such critical stakeholder objectives as: • Growing and sustaining revenue Figure 2—The CDO typically has a focus across one to four key dimensions • Selling the right solution to the right customer and maximizing profits Four faces of the CDO Focus areas • Enhancing operational efficiency and Seeks to instigate innovation • Innovation • Change through explotation of data and management reducing associated costs • Reengineering analytics • Stakeholder • Enhancing risk management Catalyst • Talent management management • Reducing fraud Partners with the business to • Strategy • Regulatory • Improving regulatory compliance align business and data analytics development planning strategies to maximize the value of • Demand • Risk management • Enabling new business strategies and data and analytics investments management innovation. • Value management • Portfolio Strategist management The CDO takes an enterprise view of data, building bridges and knocking down walls as Assesses technologies and design • Architecture • Solution delivery needed to enable data to flow expediently data and technical architectures to • Technology partners • Technology across departments and functions for better increase business aglity and governance consumption and leverage. In addition, manage complexity • Delivery management • Security and more than ever the CDO is the ambassador Technologist controls for the vision, business value, and resulting benefits of effective data management. Defines, manages and governs data • Data governance • Shared services and technology policies/programs The importance of this communication • Data quality • Sourcing responsibility cannot be understated. We and operations to promote and control operational
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