Since the Royal Commission into banking in Australia shone a spotlight on the industry, banks and other financial institutions have been under more pressure than ever before to know exactly where their data is, across all departments and all systems.

ABC News reported in February this year, 12 months after the Commission was formed: “Financial regulators are more likely to litigate when considering breaches of law and legislation is delivering more transparency.” This places significantly more pressure on organisations to be accountable for their data, in order to comply with regulators and ensure that their data is transparent and accessible at all times.

Senior banking heads have lost their jobs since the Commission, and 40 pieces of legislation resulting from the inquiry remain on the Australian Federal Government's agenda for this year.

The repercussions present a serious challenge to the banking industry's future, and data virtualisation can help with pinpointing faster, departmentally agnostic data collation. Data virtualisation is the core technology that enables modern data integration and data management solutions. The technology will:

• Connect quickly to disparate structured and unstructured sources. 
• Catalogue the organisation's entire data without replicating it—data stays in the sources and is accessed on demand.
• Combine the data into business views by building models that suit the needs of the data consumer, thus hiding the complexity of back-end technologies from these end users. 
• Publish the data in multiple formats such as standard SQL, REST, SOAP and OData, which can be securely consumed by the end users within their favourite applications

According to Gartner, through 2022, 60% of all organisations will implement data virtualisation as one key delivery style in their data integration architecture.

The challenges 

To stay competitive and provide the transparency demanded of them by the Royal Commission, financial institutions are offering novel, higher margin products and services while seeking to improve operational efficiency. They are striving to provide business analysts with better self-service capabilities, and they are working on providing customers with real-time information, mainly in the service of up-selling, cross-selling, fraud detection, and risk management initiatives. This real-time information also serves to maintain the transparency and accountability now required of them by law in Australia.

The financial services industry has always been first to adopt technological innovations for business process optimisation and better customer interaction. Even without the fallout from Australia's Banking Commission, organisations constantly struggle to remain profitable when relying on traditional revenue streams and are under constant pressure to evolve. Hence, financial services firms are heavily engaged in digital transformation initiatives using cloud technologies, big data systems, self-service analytics, and many other modern tools and technologies.

But if these components are not interconnected in a way that enables them to generate real-time information that business stakeholders can consume in a self-serviceable manner, then the digital transformation will yield limited benefits.

Data virtualisation as the solution

Data virtualisation can play a critically important role in the process of improving the flow of information within the organisation. With data virtualisation at the centre of their enterprise architecture, a financial services organisation can attain a 360° view of their customers, which brings the attendant benefits of fast, accurate reporting on customer behaviours as well as the accountability and governance required by law following the Royal Commission.

Data virtualisation allows the organisation to access data regardless of where it might be stored within the company—across departments, data centers and even remote offices. Data virtualisation provides intelligence through the metadata layer, which allows the system to connect to and combine the data in the source applications, and then deliver that aggregated data to end users. This negates many of the data siloes and bottlenecks that occur across large financial institutions, many of which still have older customer data held in legacy systems.

Virtualisation can also provide information on the lineage of data, indicating how it has transformed over time, where it comes from, and how it is associated with other data sources over the life of its journey. This goes a long way towards ensuring that an organisation can account for its data at all times, and therefore maintain proper governance.

Put simply, the benefits of data virtualisation are:

• A 360° view of the customer, which helps in understanding changing needs and behaviours.
• Timely financial intelligence, to make better pricing and promotional decisions.
• A real-time view into a variety of institutional and market risk data sources.
• Faster fraud detection and prevention, to improve customer confidence.

Case study

A large financial holding company is supporting regulatory compliance with an agile, modern data architecture from a leading data virtualisation vendor.

The holding company has crossed the $50 billion threshold in assets, with the latest acquisition of a retail bank, making it a systemically important financial institution and subjecting themselves to stringent regulatory oversight.

To meet compliance requirements, the company needs a controlled data environment to enable intercompany data transfers with a complete understanding of lineage from source to destination.

Data virtualisation enables this finance company to create a data services layer with the agility to integrate new data sources, and help with the management and movement of data. The virtualisation technology is helping the company to ensure that everyone consumes data from a single source of the truth, and reduce unnecessary copies of data and proliferation.

Faster data for regulatory compliance and business efficiency 

In the post-Commission world, financial organisations need faster access to data, right across the spectrum of systems they rely upon. Better access leads to better accountability and transparency, which will help meet governance requirements – while also maintaining a competitive edge through deeper insights into customer behaviour. Data virtualisation can empower them to achieve both goals.