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The role of Data Vault 2.0 amidst ever-changing regulations in financial services

Article contributed by Shreenath Nair, Head of Strategy APAC, Wherescape

Financial services organizations must frequently deal with compliance and reporting changes as regulatory standards evolve within the digital landscape. Although regulators allow these organizations some time to adopt these changes, the challenge of managing widening data sets across multiple data sources can quickly become overwhelming.

To further complicate matters, traditional data warehouses – built using dimensional modeling techniques – can restrict the ability of financial institutions to respond to changing technological and business needs. This lack of agility is especially problematic in an environment where regulatory bodies expect to receive a single source of truth on demand.

In the event of a data breach or attack, organizations have to prove that all the necessary steps were taken when collecting and storing data, including accurate documentation regarding the integration of disparate data sources. Failure to comply with regulatory requirements can result in significant financial penalties and considerable reputational damage.

The General Data Protection Regulation (GDPR) covers the European Union and the European Economic Area. This law on data protection and privacy can result in fines of up to €20 million or 4% of worldwide turnover, whichever is higher. To date, Amazon has picked up the largest GDPR penalty with a fine of €746 million, but it is the finance sector that has received more GDPR fines than any other industry.

Clive Humby, UK Mathematician and architect of Tesco’s Clubcard, famously coined the phrase, “data is the new oil.” But the threat of regulatory fines means that data could quickly go from being your most significant asset to becoming your biggest liability. As a result, financial services organizations are increasingly turning to Data Vault solutions to overcome these challenges and create modern data platforms for their future business needs.

Overcoming challenges with Data Vault 2.0

data vault

Shreenath Nair, Head of Strategy APAC, Wherescape

This year’s continuing challenges for financial service organizations include eliminating data breaches and keeping up with regulations while exceeding rising customer expectations. Organizations must keep up with technology trends to better understand and control their data landscape.

As daunting as these responsibilities might sound, many financial services organizations are overcoming these challenges and turning them into opportunities by embracing solutions like Data Vault 2.0. This innovative data modeling methodology makes it much easier to adapt to regulatory changes or modifications at the data source by combining the centralized raw data repository of the Inmon approach with the incremental build advantages of Kimball.

Essentially, Data Vault is seen as a base designed to empower organizations to build upon and enable their existing data model to evolve seamlessly in a digital world of constant change. The financial services industry can also view change through a different lens and consider it a positive rather than a disruptive experience. For example, adding new entities or data to meet regulatory compliance can easily be implemented and linked to what’s already there without additional changes to the existing data model, description, or business rules.

When thinking about improving data protection, you could be forgiven for thinking about familiar headlines around sensitive information being found on trains, in coffee shops, and in the back of taxis. But in 2022, regulators will not accept an “ignorance is bliss” approach. Instead, regulators expect businesses to know exactly who can access their data, what they are doing with it, and why. Data Vault 2.0 is one way to easily track and audit data for both data governance and regulatory purposes.

Future-proofing the business

At a time when numerous organizations have an increasing amount of technical debt, there are many stories of legacy data warehouses that are no longer fit for purpose or able to meet policy initiatives, in addition to being both inflexible and cost-ineffective to change.

In contrast, a Data Vault 2.0 solution can help decommission legacy technology to improve productivity and agility and strengthen in-house capability.

In a world of hybrid working and seamless collaboration across multiple devices, coordination, and information sharing, Data Vault 2.0 can also play a critical role in building a new Data Governance framework, designed with secure authentication, supervised access rights, policies, and procedures creating the right balance between risk with the need to access data.

Customers are surrounded by personalization on Netflix, Amazon, Spotify, and social media news feeds. This same level of service is now expected by customers everywhere, including in the financial services sector. Data Vault 2.0 is helping the industry analyze the vast amounts of data available across multiple source systems. The results are valuable insights into customer behavior needed to create new personalized products and services their customers crave.

We can safely assume that regulations governing the financial industry will continue to change and evolve throughout 2022 and beyond. As a result, financial services organizations will find themselves the prime targets for malicious actors, with regulators also watching their every move. They will be expected to rise to this challenge and adapt accordingly.

Data Vault 2.0 is widely considered the “secret sauce” to empower financial services organizations to meet regulatory requirements, remain competitive, and provide exceptional customer services that benefit both the customers and the company.


The views in this article is that of the author and do not reflect the views of Tech Wire Asia.