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Taming the Data Deluge: How Data Governance Can Be a Boon for Indian Banks


In the age of digital banking, Indian banks are swimming in a sea of data. Customer information, transaction records, market trends – the volume, variety, and velocity of data are constantly growing. Banks are also recognizing the value of collaborating with fintech companies to unlock new opportunities in co-lending, co-branding, and neobanking, allowing banks to expand their reach and cater to a wider customer base. These partnerships expose Banks to new age tech stack and data sharing models which add to new and dynamic data sources. This data deluge presents both opportunities and challenges. While it holds the key to unlocking valuable insights for informed decision-making, managing it effectively requires a robust data governance framework.

This article delves into the concept of data governance, explores the functionalities of data governance tools, and outlines how Indian banks can transform data governance from a cost center to a value generator.


Understanding Data Governance: The Cornerstone of Data Management

Data governance refers to a set of policies, processes, and technologies that ensure the availability, integrity, security, and accountability of an organization's data assets. It's akin to establishing a set of rules and best practices to manage your data effectively, just like you would manage your financial assets.


Why is Data Governance Important for Indian Banks?

For Indian banks, data governance is not just a best practice; it's a regulatory imperative. The Reserve Bank of India (RBI) mandates responsible data handling through directives like the "Master Directions - Information Technology (IT)" and the "Report of the Committee on Customer Data Management." These directives emphasize the need for customer consent, data security, and data quality – all core principles of data governance. RBI audits also look into details of the data sources, catalogue, their lineage, quality and access, all key elements of a Data Governance framework. 


Beyond Compliance: The Benefits of Data Governance

While compliance is a crucial driver, data governance offers Indian banks a wealth of benefits beyond regulatory adherence:

  • Enhanced Data Quality: Data governance ensures data accuracy and consistency across the organization. Standard checks on data quality like structure of email id, Mobile numbers or Address can also identify problems in data quality emanating from upstream internal or partner systems which need fixing. This leads to better decision-making, improved risk management, and reduced costs associated with data cleansing and rework.

  • Improved Efficiency: Streamlined data processes and standardized data formats enable faster data retrieval and analysis. Even selection of standard customer identifiers, security identifiers, data time formats are essential to ensure consistency across systems and reports. This allows banks to react swiftly to market changes and customer needs.

  • Enhanced Security: Robust data security measures implemented through data governance protect sensitive customer information from breaches and unauthorized access. This fosters trust with customers and safeguards the bank's reputation.

  • Streamlined Reporting: Data governance facilitates easy access to reliable data, enabling banks to generate accurate and timely reports for regulatory compliance and internal analysis.

  • Data-Driven Innovation: A well-governed data environment empowers banks to leverage data analytics for product development, customer segmentation, and personalized experiences.


The Role of Data Governance Tools:

Data governance tools are software solutions that automate and streamline various aspects of data management. They act as the technological backbone of a data governance framework. Here's what Indian banks can expect from data governance tools:

  • Data Cataloging & Lineage Tracking: These tools create a comprehensive inventory of all data assets within the bank, tracking their origin, usage, and transformation throughout the data lifecycle. This transparency is crucial for data quality and regulatory compliance.

  • Data Quality Management: Tools offer features for data cleansing, validation, and anomaly detection. This helps banks maintain data accuracy and integrity, leading to more reliable insights.

  • Data Security Features: Encryption, data masking, and audit trails are often integrated functionalities, ensuring data security and facilitating compliance with RBI directives.

  • Reporting: Data governance tools can automate routine tasks like data lineage tracking, and report generation. This streamlines operational efficiency and reduces manual workload.


From Cost Center to Value Generator: Transforming Data Governance

While the benefits of data governance are clear, some Indian banks might view it as an additional cost burden. However, by implementing a strategic approach, data governance can transform from a cost center to a significant value generator.

Here's a roadmap for Indian banks to achieve this:

  • Start with Business Alignment: Data governance initiatives need clear business objectives aligned with the bank's overall strategy. This ensures that data management practices directly support specific business goals.

  • Focus on Data Literacy: Invest in training programs to empower employees across all levels with data literacy skills. This fosters understanding of data governance principles and encourages responsible data handling practices.

  • Embrace a Continuous Improvement Mindset: Data governance is an ongoing process. Banks need to continuously monitor and evaluate their data management practices, adapting to evolving regulations and business needs.

  • Leverage Data Governance Tools: Investing in data governance tools can significantly improve the efficiency and effectiveness of data management processes. The cost savings from automation and streamlined workflows can offset the initial investment.

  • Demonstrate ROI: Track the positive impact of data governance initiatives. Quantify the improvements in data quality, efficiency gains, and cost reductions to showcase the value proposition to stakeholders.


Conclusion:

Data Governance may be viewed initially as a Regulatory or Compliance requirement by most Banks. A transformation in the viewpoint is needed to extract value from data across the board by most banks. Democratising data while in silos with limited access to even the metadata, will handicap Banks in their battle against nimble Fintechs. 

Drona Pay has created a modular open source data stack that has helped banks modernise their data architecture and implement Data Governance. The Drona Pay Modern Data Stack provides scalable data ingestion, processing, storage, governance and visualization built on top of leading open source elements including Iceberg, Debezium, Airflow, Spark and DataHub. By embracing Data Governance, Indian banks can gain a competitive edge by leveraging the full potential of the Data that they possess.

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