Is there a way of keeping control of your relationship data, without the costs of maintaining it going through the ceiling? Data Retirement could be a serious option, insists Michiel van der Lans, who explains why in this blog, as well as what it is.
Remember the “good old days”, when a bank or insurer just needed a name and date of birth to identify a customer. That’s truly unimaginable in this day and age, when so much more information is needed in customer identification. Like a telephone number, for example, an email address, or even a Facebook account or Twitter name. Every day, banks and insurers are having to deal with increasing amounts of relationship data. And managing it all is getting more and more complicated and labour-intensive.
Increasing legislation and regulations – and costs
The continuing proliferation of relationship data has been accompanied by increasing legislation and regulations that require, and even demand, that your data management is properly in order. You need think no further in this context than GDPR, KYC, CDD and UBO. But, of course, as a financial-services provider not only do you want your relationship data to be in order, it also has to be correct. And this means that your data must be maintained, properly.
Today’s data-quality requirements make the maintenance of relationship data expensive. Just here in the Netherlands, for example, there are about 5,000 mutations every day. Changes of address, telephone numbers, civil status, and so the list goes on. According to recent studies, the upkeep of a data set costs approximately a euro per year, per data record. Now while that might seem manageable, consider the millions of records in many databases, do the math, and it quickly becomes evident that it all adds up.
A solution: Data Retirement
Given that the maintenance of relationship data – particularly taking into account current legislation and regulations – is a very costly business, is there a solution? There is: Data Retirement. At the moment, many banks and insurers maintain databases, just in case they might need access to obsolete data. Data that is subject to regulatory retention requirements cannot simply be purged. With Data Retirement, however, data is not purged; it is stored in a separate, secure environment that does not need to be maintained. In other words, the data is removed from the active customer database. Once data is stored in this environment, it is very difficult to reactivate the application or access the data in a readable format.
What are the advantages? Well, first of all Data Retirement can save you a lot of money. The active data file becomes smaller, meaning there is less data in it that needs to be maintained. And the number of data loads is also reduced. The costs savings, which are substantial, are made in the areas of hardware, business efficiency and data quality. Secondly, your active database will not contain unnecessary data. This makes it easier to identify your customers and you’ll be able to give them better service. And because you’ll have the most up-to-date customer data, you’ll be able to offer unique and bespoke customer service. This is still something that constitutes a significant challenge for many financial-services providers. Faced with competition from today’s amazon.coms, this is definitely an area in which you need to keep pace. Your customers even expect you to.
Data “offboarding” – let’s do it!
In financial-services circles the term data “offboarding” may sound ambiguous and even a little scary, but it does offer substantial advantages. For example, Data Retirement can save considerable costs when it comes to data maintenance and data recovery. Additionally, it can be an indispensable way of offering your customers a good customer experience. Data Retirement never actually deletes data, it moves it to a separate environment where it is archived. Put a different way, you could say that it’s data that has retired, but doesn’t draw a pension. So what are you waiting for? Everyone – including data – should be able to look forward to a well-deserved retirement, right?
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