CASE STUDY - M&S Money Meets the Compliance Deadline for Basel II Through an Enterprisewide Data Quality Initiative
Commentary by Neil Hershaw, Information Management Officer, M&S Money
M&S Money is a leading U.K. financial services company, a wholly owned subsidiary of global banking leader HSBC. It retains a close working partnership with UK-based Marks & Spencer and collaborates on customer activities. Like all financial services providers operating in the E.U., M&S Money was faced with the Basel II Capital Accord, requiring the tracking and reporting of ongoing exposure to credit, market, and operational risks. The compliance deadline was January 1, 2007. Basel II is a demanding piece of legislation that requires extensive expertise and sophisticated data management capabilities if the quality and integrity of data is to be consistently assured.
M&S Money therefore needed to deliver a data quality initiative that ensured data was managed according to a set specification throughout the whole information environment, imposing quality controls at many points throughout the architecture while retaining centralized control and management. Neil Hershaw, information management officer for M&S Money, saw this mandate as an opportunity to improve data quality enterprisewide. “Basel II’s compliance deadline presented us with both a challenge and an opportunity—delivering high-quality data to ensure successful risk management, but also improving our data to drive improvements in many other areas of our operations.”
In addition to the compliance requirements, M&S Money sought broader data management benefits. These centered on the need to avoid potential customer frustration caused by inaccurate data, enabling the company to undertake business analysis and, therefore, sales activities with greater confidence. In selling to Marks & Spencer customers, M&S Money has adopted the policy that when it is not completely confident about data accuracy, and therefore a customer’s likely interest, it will not approach the customer at all, rather than risk any frustration. “We cannot ever risk upsetting a customer because of problems with our data,” Hershaw crystallized the issue.
There was obviously the need to satisfy the data quality elements of Basel II, but also taking this enhanced overall approach to data management would give us greater confidence in our activities to create sales and therefore help drive competitive advantage inthe market.
Neil Hershaw, M&S Money
As part of the project to ensure Basel II compliance, therefore, M&S Money planned and delivered a data quality project to accomplish a number of operational benefits, namely the assurance of customer data accuracy, reduction of time taken to complete business analysis, and increased assuredness in the quality of data from which business intelligence is created.
M&S Money chose the Informatica PowerCenter data integration solution as the cornerstone of its project. Informatica Data Quality was specifically selected to assure the quality of data input and extraction from its Oracle data warehouse. Given the impending Basel II deadline, M&S Money created a specification in mid-2004 for a data quality initiative that would meet the regulatory requirements and the Financial Services Authority (FSA) mandates, as well as deliver a platform for enhanced organization-wide data quality management. Informatica was chosen because of PowerCenter’s technical attributes, its scope for customization, and its ability to integrate a multitude of disparate data feeds. Moreover, the Informatica team demonstrated a wealth of knowledge of how best to achieve the level of data quality required for Basel II compliance and brought the experience of managing similar scales of assignments for major banks and financial institutions. “Basel II sets the bar high on required data management practices. Compliance dictates the ability to correlate a significant history of consistent, accurate, and granular data. Equally, as an organization, we wanted to ensure we could always undertake quantitative measurement of our data to be utterly assured of its accuracy,” said Hershaw.
Constant Monitoring of Data Quality
The primary operational driver was that M&S Money needed to be constantly aware that its data was of the appropriate quality and that it could always demonstrate clear management of the data. Informatica Data Quality was deployed as a data quality management platform alongside the data warehouse to ensure that data feeds comply with the required quality levels, ensuring that BI data remains wholly accurate. Equally, the solution had to support M&S Money’s new data management procedures, which were introduced as part of the project, so that any changes that could negatively impact quality would be immediately addressed and nullified.
Ensuring Data Quality from Third Parties
In creating this caliber of data quality management platform, the company also had to consider the need to assure the sustained accuracy of data derived from third-party feeds, such as those from insurance policy providers. Again, Informatica Data Quality provided the required support for these disparate data feeds, and therefore enabled all data quality to be managed within a single framework.
The methodology for the project began with defining data quality rules for the relevant files and tables, coding those rules, running the data, then analyzing the data and creating an action plan for quality assurance. Once the project is completed, data quality levels are evaluated formally on a quarterly basis.
Basel II Compliance
The main driver for the business was compliance with Basel II’s stipulations; this was completed successfully a year ahead of the deadline. The company has created an assured level of data quality that has enabled it to undertake business analysis and financial reporting with greater confidence.
Forty Percent Reduction of the Analysis Cycle
A further gain has been the reduction of the analysis cycle by up to 40 percent, meaning faster comprehension and validation of information thanks to less time spent assessing the accuracy of the data.
Flexibility and Support
“We evaluated several potential solutions,” Hershaw summarized, “and chose Informatica because they have vast experience in Basel II compliance and Informatica PowerCenter was the right solution for our needs. It offered ease of use, support for our existing IT environment, and the ability to be customized to meet our precise requirements. We needed to ensure that all data feeds, be they internal or external in origin, were in line with our quality specifications. The Informatica platform has given us the ability to provide that assurance to our business and to enable our analysts to create rules for how the data should be treated, without having to consult a program or make changes to our systems.”
An Engine to Drive Business Development
M&S Money’s IT team is now able to provide quantitative measurement of the data held by the organization, which was a broader goal of the initiative. For a financial services company, that resource has proven to be invaluable in providing the “engine room” that drives business development. After Informatica Data Quality went live, it took business analysts just four days to develop 20 Basel II business rules on the fly, deliver a data accuracy scorecard, create profiles on account history tables, and develop other business rules that were then added to the scorecard. “Basel II has been a blessing in disguise. Improved data quality and the ability to measure that quality have impacted our business for the better in several areas,” said Hershaw. “It is clear that business analysis has benefited, but also there are factors such as how we evaluate our sales and marketing. We are now able to ascertain with confidence what activities have caused a sale.
“We live by the mantra that customers must be presented with no surprises, but we also experienced no surprises of our own in meeting the requirements of Basel II. It was a tough assignment, but the detailed planning and execution enabled us to minimize the scale of the challenge. We’re now even more confident that we will always deliver on our commitments to customers and can assure high levels of data quality to assist in running our business,” Hershaw concluded.
This article originally appeared in the issue of .