Banks, credit unions and other financial institutions operate in a compliance-heavy environment. A single information error could put these organizations at substantial regulatory and monetary risk, making data quality for banks paramount.
It is more important than ever for banks to process payments quickly and accurately. Not only to give businesses faster access to their funds but grow market share, attract new customers and retain existing customers/members.
In 2020, at the onset of the pandemic, many Account Payable (AP) departments switched to working from home, transitioning to digital payments and real-time payment transactions.
The dramatic shift in digitization impacted the way banks handled payments and further underlined the importance of optimizing technology to ensure high-quality data.
As financial transactions enter banks’ systems, they go through multiple exchanges from origination to clearing. As a result, the probability for data quality to degrade over time increases. This complexity is particularly true for banks that operate within the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
SWIFT payments are time sensitive. Banks must ensure that real-time transactional messages are correctly formatted and remain accurate through the processing flow exchange. Financial institutions that can identify potential data quality issues have a significant competitive advantage. Banks who struggle to detect and eliminate errors experience regulatory fines, negative customer reactions and reputational consequences.
Organizations using the SWIFT payment system track formatted payments as they move through systems in real time. During processing, payment formats, values and transaction description fields must remain consistent throughout the transaction balancing process. When processing errors do occur, financial institutions must quickly locate and resolve them or face fines.
Reducing errors and ensuring data quality for banks requires an integrated strategy and solution that merges data quality efforts with an overarching data governance framework, in addition to a 3D data lineage solution. With a comprehensive data quality approach, financial organizations monitor end-to-end data integrity of the electronic payment and settlement process.
With 3D lineage capabilities, the right solution offers real-time visibility into every step of the SWIFT payment process. 3D data lineage provides various audit trails to support regulatory compliance and reduce operational dangers. Additionally, by incorporating data quality rules at key stages within and between critical systems involved, the solution helps banks improve data quality and processing times which increase customer satisfaction. As a result, banks achieve a multitude of benefits.
With an integrated data quality solution and increased visibility into the SWIFT payment process, financial institutions realize five crucial benefits related to payment speed, accuracy and compliance, including:
Data quality is critical for banks to mitigate regulatory risk, improve customer retention rates, and achieve financial services success. Institutions that prioritize data quality and adopt modern technologies to strengthen enterprise-wide visibility into data and its accuracy in 2021 will drive future innovation of the banking industry.
Are you looking for additional information about ensuring high-quality data for banks? Check out our case study, Reducing Regulatory Risk at Swedbank: Ensuring SWIFT Payment Speed, Accuracy and Compliance.
For additional information about data quality, check out this post from Gartner, How to Create a Business Case for Data Quality Improvement.