The pandemic also shed light on the broader obstacles banks face with data.
Firstly, banks have a set of known unknowns – CROs recognize that they don’t have all the data they need to make informed decisions and instead are having to make do with what is available. This is particularly relevant for their sustainable finance and environmental, social and governance (ESG) agendas, where specific data isn’t yet available or standardized.
In the case of ESG reporting, banks are increasingly being asked to make public commitments on how they plan to reduce their exposure to carbon-intensive industries. Data is fundamental to helping these banks to clearly understand the complexity of their investment supply chains and how they tie in with the real economy. How banks use and share this data is becoming more and more complex as the parameters around such reporting shift and banks’ exposure becomes more transparent in the public eye.
Secondly, there are a whole host of unknowns, meaning that banks aren’t yet aware of what data they should look for and have on their systems. For banks’ risk functions, this is a growing challenge and this is where hiring the best talent to navigate new environments will be crucial to maintaining strong resilience. It will call for more creative thinking about the many “what ifs” banks now have to consider in an ever-more connected global economy.