New AFS-RMA Survey Indicates Great Leap Forward in Data Confidence

AFS and RMA's jointly conducted Eighth Annual RMA/AFS Data Quality Survey gathers insights into how data quality is perceived, evaluated, and managed by banks. This year's survey was conducted from November 4 to December 12, 2016 and consisted of 50 questions covering data governance, confidence, and new initiatives. The survey was sent globally to bank executives with responsibility for credit, risk, and/or data management. Responses were received from 48 institutions in North America, Europe, and EMEA. 73% of respondents represented risk management, 10% commercial credit, 6% technology, and 10% other.

The latest installment of RMA's Credit Risk Management Audio Conference Series presented the results of this survey, and indicated that bankers' confidence in their data quality soared to 50% after two years of a sharp decline. Several banks rated their data quality as "excellent" for the first time since 2012. Of the 26 repeat banks from the 2015 survey, 10 increased their confidence level while only one decreased.

But what is good data quality and what does it depend on? Effective credit risk management is predicated upon certain basic capabilities including 1) measuring the risks inherent in credit applicants, 2) information about current credit positions and exposures, 3) forecasting how and why exposures can change, and 4) managing to keep exposures within established risk appetites. These capabilities, and the decisions based upon them, are all fundamentally dependent on the quality of data supporting them. The survey tracks how banks define and judge their data quality, what policies and procedures are in place to manage it, and what specific steps they are taking to improve it.

The key findings of the survey, as well as what's in store going forward, include:

  • Broader and higher level of confidence in data quality and its factors.
  • Many more banks have enterprise-level governance plans.
  • Consensus around single executive with centralized data responsibility.
  • Less than half of banks can track data quality through the entire credit process.
  • Cleanup initiatives remain highest priority and involve additional staffing.
  • Half of banks believe they are investing enough in data quality, but mixed success so far.
  • Chronic impediments persist: terminology, manual entry, lack of validation controls.

Join us on Tuesday, April 11, 2017 for the next offering in the Credit Risk Management Audio Conference Series: What have Alternative Lenders Taught Banks?

Washington – The Week Ahead, September 25–29, 2017

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