Palturai is currently presenting the results of a series of projects in the financial industry in the area of data quality of company master data. The shocking finding: in an industry where accurate and up-to-date data is essential, data quality is often inadequate. Given the regulatory requirements, banks, insurance companies and other financial service providers should actually pay particular attention to reliable data. However, this topic does not yet seem to be sufficiently appreciated in many companies. At least this is reflected in the results of our projects.
Two main problem areas emerged in the companies we examined.
Double and triple = confusing and costly
We examined all business partners of the respective companies for duplicates. To do this, we checked the business partners against our reference database. All those responsible in the respective companies had probably expected a high rate of duplicates. But the fact that on average 50% of the data records were not ‘unique’ was surprising. Many business partners were not only created twice, but multiple times.
Various sources were identified as the causes:
- Data silos are a key driver of duplicates. Business partners can be customers, suppliers, partners or other companies with which a business relationship exists. This data is often maintained in department-specific databases. As a result, there is a lack of knowledge about cross-connections and data is also maintained multiple times – often with different content.
- Misguided sales incentivization is another driver that is often concealed. When onboarding new customers, a conscious decision is made not to check whether the company already exists. This increases the new customer rate and enables the sales department to achieve its often ambitious goals.
Old and wrong = expensive and risky
Outdated and incorrect data is not only a further driver of duplicates, but also leads to considerable additional costs and even prevents regulatory requirements from being met in accordance with the law.
Random checks revealed the problem of unrecognized name changes in particular. In the picture above, you can see a wide variety of systems from one and the same company. Many of the duplicates were created because there was a lack of transparency regarding mergers and name changes. In many cases, there is also the ‘creative’ way in which employees fill in master data.
Unambiguous identification and verification of customers in order to comply with a wide range of legal regulations is hardly possible on the basis of such data. On top of this, many companies in the financial sector still use a high level of written communication, usually in the form of letters. Of course, the costs are also multiplied by a factor of x for multiple customers!
