IBM - International Business Machines Corporation

02/26/2024 | Press release | Distributed by Public on 02/26/2024 13:35

6 benefits of data lineage for financial services

The financial services industry has been in the process of modernizing its data governance for more than a decade. But as we inch closer to global economic downturn, the need for top-notch governance has become increasingly urgent. How can banks, credit unions, and financial advisors keep up with demanding regulations while battling restricted budgets and higher employee turnover?

The answer is data lineage. We've compiled six key reasons why financial organizations are turning to lineage platforms like MANTA to get control of their data.

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1. Automated impact analysis

In business, every decision contributes to the bottom line. That's why impact analysis is crucial-it predicts the consequences of a decision. How will one decision affect customers? Stakeholders? Sales?

Data lineage helps during these investigations. Because lineage creates an environment where reports and data can be trusted, teams can make more informed decisions. Data lineage provides that reliability-and more.

One often-overlooked area of impact analysis is IT resilience. This blind spot became apparent in March of 2021 when CNA Financial was hit by a ransomware attack that caused widespread network disruption. The company's email was hacked, consumers panicked, and CNA Financial was forced to pay a record-breaking $40 million in ransom. This is where lineage-supported impact analysis is needed. If you experience a threat, you will want to be prepared to combat it, and know exactly how much of your business will be affected.

IT resilience is also threatened by natural disasters, user error, infrastructure failure, cloud transitions, and more. In fact, 76% of organizations experienced an incident during the past two years that required an IT disaster-recovery plan.

Most organizations struggle with impact analysis as it requires significant resources when done manually. But with automated lineage from MANTA, financial organizations have seen as much as a 40% increase in engineering teams' productivity after adopting lineage.

2. Increased data pipeline observability

As discussed above, there are countless threats to your organization's bottom line. Whether it is a successful ransomware attack or a poorly planned cloud migration, catching the problem before it can wreak havoc is always less expensive.

That's why data pipeline observability is so important. It not only protects your organization but also your customers who trust you with their money.

Data lineage expands the scope of your data observability to include data processing infrastructure or data pipelines, in addition to the data itself. With this expanded observability, incidents can be prevented in the design phase or identified in the implementation and testing phase to reduce maintenance costs and achieve higher productivity.

MANTA customers who have created complete lineage have been able to trace data-related issues back to the source 90% faster compared to their previous manual approach. This means the teams responsible for particular systems can fix any issue in a matter of minutes, according to MANTA research.

3. Regulatory compliance

The financial space is highly regulated. Institutions must comply with regulations like Basel III, SOC 2, FACT, BSA/AML and CECL.

All of these regulations require accurate tracking of data. Your organization must be able to answer:

  • Where does it come from?
  • How did it get there?
  • Are we capable of proving it with up-to-date evidence whenever necessary?
  • Do we need weeks or months to complete a report?
  • Is that report even entirely reliable?

Data lineage helps you answer these questions by creating highly detailed visualizations of your data flows. You can use these reports to accurately track and report your data to ensure regulatory compliance.

4. Efficient cloud migrations

McKinsey predicts that $8 out of every $10 for IT hosting will go toward the cloud by 2024. In the financial space, 40% of banks and 41% of credit unions have already deployed cloud technologies.

However, if you have ever been involved in the migration of a data system, you know how complex the process is. Approximately $100 billion of cloud funding is expected to be wasted over the next three years-and most enterprises cite the costs around migration as a major inhibitor to adopting the cloud. The process is so complex (and expensive) because every system consists of thousands or millions of interconnected parts, and it is impossible to migrate everything in a single step.

Dividing the system into smaller chunks of objects (reports, tables, workflows, etc.) can make it more manageable, but poses another challenge-how to migrate one part without breaking another. How do you know what pieces can be grouped to minimize the number of external dependencies?

With data lineage, every object in the migrated system is mapped and dependencies are documented. MANTA customers have used data lineage to complete their migration projects 40% faster with 30% fewer resources.

5. Improved workflow & IT retention

Data engineers, developers, and data scientists continue to be fast-growing and hard-to-fill roles in tech. The shortage of data engineering talent has ballooned from a problem to a crisis, made worse by the increasing complexity of data systems. The last thing you want is to continually overstretch your valuable data engineers with routine, manual (and frustrating) tasks like chasing data incidents, assessing the impacts of planned changes, or answering the same questions about the origins of data records again and again.

Data lineage can help to automate routine tasks and enable self-service wherever possible, allowing data scientists and other stakeholders to retrieve up-to-date lineage and data origin information on their own, whenever they need it. A detailed data lineage map also enables faster onboarding of data engineers to integrate new or less-experienced engineers into the role without impacting the stability and reliability of the data environment.

6. Trust and data governance

Data governance isn't new, especially in the financial world. The Basel Committee released BCBS 239 as far back as 2013. The regulation was meant to strengthen banks' risk-related data-aggregation and reporting capabilities-enhancing trust in data.

Report developers, data scientists, and data citizens need data they can trust for accurate, timely, and confident decision-making. But in today's complex data environment, you're dealing with dispersed servers and infrastructure, resulting in disparate sources of data and countless data dependencies. You need a complete overview of all your data sources to see how it moves through your organization, understand all touch-points, and how they interact with one another. You can only completely trust your data when you have a complete understanding of it.

Data lineage provides a comprehensive overview of all your data flows, sources, transformations, and dependencies. You'll ensure accurate reporting, see how crucial calculations were derived, and gain confidence in your data management framework and strategy.

Why MANTA is the right fit for data lineage in financial services

MANTA has helped dozens of customers in the financial space realize the benefits of data lineage. We bring intelligence to metadata management by providing an automated solution that helps you drive productivity, gain trust in your data, and accelerate digital transformation.

The MANTA platform includes unique features to make the most value out of your lineage, with more than 40 out-of-the-box, fully automated scanners. In addition, MANTA works alongside the most popular data catalogs; our platform integrates with catalogs like Collibra, Informatica, Alation, and more.

Don't wait. Realize the benefits of automated data lineage today.

Schedule a demo with a MANTA engineer to learn more.

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