From a number of projects in the financial industry, Palturai is currently presenting the results in the area of data quality of corporate master data. A frightening realization: Especially in an industry where correct and up-to-date data is essential, data quality is often inadequate. Especially due to regulatory requirements, banks, insurance companies, and other financial service providers should actually pay special attention to reliable data. However, this topic does not yet seem to be sufficiently appreciated in many institutions. At least that is what the results of our projects reflect.
Two main problem areas have emerged in the companies we examined.
Double and triple = confusing and expensive
We checked all business partners of the respective companies for duplicates. For this purpose, we compared 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 duplicated, they were duplicated many times over.
Different sources were identified as causes:
- Data silos are a major driver of duplicates. Business partners can be customers, suppliers, partners or other companies with whom a business relationship exists. This data is often maintained in department-specific databases. This means that there is no knowledge about cross-references and, in addition, data is maintained multiple times – often enough with different contents.
- Misguided sales incentives are another driver, which is often concealed. When onboarding new customers, the company deliberately does not check whether the company already exists in the inventory. This increases the number of new customers and the sales department can reach its often ambitious goals.
Old and wrong = expensive and risky
Outdated and incorrect data is not only a further driver of duplicates, it also leads to considerable additional costs on the one hand and on the other hand it even prevents regulatory requirements from being met in accordance with the law.
Random checks in particular revealed the problem of unrecognized changes of name. In the picture above you can see the most different plants of one and the same company. Many of the duplicates were created because there was no transparency about mergers and renaming. In addition, in many cases, the employees’ ‘creative’ approach to filling in master data is a further factor.
Clear identification and verification of customers to fulfill various regulations of the legislator is hardly possible on the basis of such data. Many companies in the financial sector still use a high degree of written communication on top, mostly in letter form. With x-fold invested customers naturally also the costs multiply themselves around the x-fold!