June 19, 2012 – Financial institutions are missing benefits to data quality and information sharing with short-sighted answers to compliance requirements, according to a new report from the financial market research and advisory Tabb Group.

In the report, entitled “Data Agility: Turning a Liability into an Asset,” Tabb assesses spending and implementation plans at financial firms, and their ramifications with enterprise information sharing and distribution. Tabb found that spending on internal resources will drop to 39 percent of the overall IT budget by 2014, reflecting a 5 percent decline from 2012 and a 27 percent decrease since 2000. For instance, upgrades to reference data management are still led by the continued management of legacy systems (36 percent), which results in directions such as tacking on another database rather than seeking out wider reaching infrastructure advances, the firm reported.

The leaders in collaborative and agile data systems will marry budgetary and compliance challenges with projects tied to integration and revenue, wrote report author Miranda Mizen, a financial markets and applications researcher at Tabb.

“First-mover organizations whose top-down business operating model drives their data, product development and deployment management strategies will gain a level of kinetic intelligence that far outpaces their rivals. They will excel at linking powerful cloud and network distribution technologies with legacy data and applications,” Mizen wrote.

A slew of recent compliance requirements in the U.S. and Europe have ratcheted up the challenge for financial enterprise IT. Demand for rounded views of this data are often met with quickly implemented compliance initiatives that Tabb said miss deeper opportunities for in-house data. The essence of three recent financial compliance demands – The Foreign Account Tax Compliance Act, Legal Entity Identifiers and swaps reporting – offer a chance to include agile enterprise initiatives that would open revenue opportunities in the same fashion as implementing customer relationship management, Tabb stated.

As collaboration, mobile and big data expectations and capabilities rise, Tabb doesn’t see the problems surrounding agility lessening any time soon for financial institutions. On the technical level, Tabb said business users could benefit greatly from projects to clean up and flesh out metadata and layering semantic libraries onto data to give sharing more power and options. From a higher level, Tabb noted that there must be a roadmap in place for an integrated approach to sharing data across the enterprise and different devices.

“This means that traditional technology and delivery approaches need to be reassessed and modernized to put innovation in the hands of the business users,” Mizen wrote. “Intelligence … is a form of service, where the volume of data and the complexity of the business model increase rather than undermine the level of intelligence available.”

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