- Lack of common terminology Financial reporting is often hindered by a lack of formalised and commonly understood business and accounting terminology between Finance and other functions. There is a risk that protracted time to resolve issues results in either an issue not being understood or getting lost in translation. As a consequence, financial reporting can remain unchallenged. The introduction of a single book hierarchy with a single product taxonomy will begin to address this issue. Classifying data and making it widely known and understood in the organisation will ensure Finance and Risk are aligned with each other and with other areas of the bank.
- Absence of consistent source of transactional data Transactional data is often separated as it passes through the investment bank architecture. This is due to the belief that Finance, Risk and Operations communities need to process and adjust the same set of data so differently that each must have its own dataset. This forced divergence away from the consistent central source of transactional data is inefficient. Divergence of data brings with it people and process difficulties such as the need for duplication of effort and increased reconciliations. Once the data sets become segregated, significant time and effort needs to be invested by Finance, Risk and IT to ensure data integrity. A consistent source of data must be accessed by Finance and Risk. This can be achieved by implementing a financial data warehouse with a strong data management policy ensuring data governance, quality, and security
- Absence of a single golden source of reference / static data Systems must access a single source of reference/static data to ensure that the front and back office information is consistent. This golden source needs to be mandated and distributed for use in all data sets. The absence of a single transaction reference point currently means that when the financial control has a query, several layers of data need to be investigated before they can explain to Front Office teams what is being referred to. Add to this the transactional data separation point from above, and reconciliations become a labour intensive headache. Individual reference data changes have a substantial impact on discrete reporting positions. A change to a single (major) counterparty can impact thousands of reporting positions referenced in many different local reports as the next illustration reflects
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