Challenge for Banks Extends Beyond Data Management
Martin Sreba (pictured to the right), Principal, Advent Global Accounts (San Francisco)
Banks will continue to struggle with the Dodd-Frank Act for years to come as only the first few phases of the rules are being brought to light. This year's emphasis is on increased fund transparency and hence the ability for the regulators to monitor systemic risk. Firms falling under the definition of a private fund adviser face a new reporting obligation under rule 204(b)-1, also known as Form PF.
It has been greatly underestimated how much this new regulatory burden will cost the industry -- even firms that thought they were prepared and have all the data in-house are finding that meeting all of the requirements is putting great stress on their internal operational infrastructures. The challenge is not just in data management, but also in the synthesis of this information to meet these regulations.
Financial firms are finding that aggregation and normalization of the data are crucial, but a preceding step exists -- the definition of data itself, or the taxonomy of the required information according to what the regulators want. This in itself is a very subjective task. Firms are adapting by finding the answer in technology to create a solution, which could automate the synthesis of the information with a repeatable process that will house most of the data required -- hence making it much easier to synthesize the information without the need for enrichment.
