2 minute read 19 Jun 2020
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How technology and data leaders should respond to the COVID-19 crisis

Authors
Mahesh Shahapurkar

Director, Financial Services Consulting, Ernst & Young LLP

Passionate about leveraging data and analytics to deliver business growth. Technology enthusiast. Avid badminton player.

Phil Tattersall

Associate Partner, Wealth & Asset Management Technology Consulting, Ernst & Young LLP

Passionate about the positive impacts we can make across the industry one project at a time. Husband and father of two. Football fan.

2 minute read 19 Jun 2020

For firms grappling with the implications of current situation, access to high-quality, reliable data has never been more critical.

For nearly four months, COVID-19 has dominated every news broadcast and every front page. The radical shift in business operations which the virus has forced on the global economy has tested many managers’ technology architectures and operational resilience arrangements. By now, the majority of companies are operating something like business as usual, with most staff able to work remotely and collaboration tools bedded in.

Nevertheless, the need for urgent, novel and wide-ranging business analysis, the demand for timely and insightful management information (MI), and the necessity of effective engagement with employees, investors, markets and regulators, has brought to the fore the importance of data for business continuity and growth.

Over the long term, many business leaders expect no quick return to pre-crisis styles of working and estimates of 30-40% home working are now typical. In such a distributed environment, accessible data will be key. For firms grappling with the short-and long-term implications of the situation, access to high-quality, reliable data has never been more critical, and it is incumbent on technology and data leaders to respond accordingly.

This article has been written to guide chief technology officers and chief data officers of asset managers and wealth managers in supporting both the immediate and longer-term data needs of their organizations. This includes a checklist of tactical actions which can be taken now to support key business functions.

It also identifies factors which have been effective in supporting leading organizations to adapt to lockdown, as well as suggested longer-term actions that can be undertaken in order to build the foundations of a more resilient, flexible, efficient and valuable data architecture.

Given the impact of such changes, it is key that these initiatives are undertaken as part of an integrated transformation agenda, working across the whole business and engaging with your wider provider ecosystem.

  • Key COVID -19 pressure points across the value chain

    • Enterprise controls: 3LOD adaptation, fund governance and stewardship
    • Operational resilience: Distributed working, critical functions, partner ecosystem
    • Regulatory compliance: Managing regulatory compliance, harm, good-practice regulatory relief measure
    • Tax: Corporate, fund, operations, staff and investors
    • Financial resilience: Orderly month-/quarter-end close, financial steering and planning
    • People: Workforce mobility, immigration, productivity, future of work
    • Strategic cost transformation: Working capital and operating margin, ROI & change management
    • Technology: Distributed working, major programme transformation, vendor resilience

Actions you should take now

1. Ensure adequate data security safeguards to deal with the new ways of working

Home-working materially increases the risk of data privacy breaches and data loss, and the National Cyber Security Centre has reported an unprecedented increase in cyber security threats. You should assess information security controls to ensure their adequacy, especially with regard to collaboration platforms. Check compliance of all staff with data privacy and security training, and increase network surveillance and your capacity to tackle cyber emergencies.

2. Review implications for GDPR and data privacy compliance

The European Data Protection Board has issued a statement on processing personal data in the context of COVID-19. Where firms are collecting additional data from their employees or customers, this needs to be for legitimate reasons – such as obligations relating to health and safety at the workplace – or otherwise in the public interest. Data privacy notices may need to be updated in such cases and you should seek advice on the legal and technical implications.

3. Monitor the impact on sourcing and quality of critical data elements (CDEs), and strengthen your data governance

There is a continued risk of service disruption from custodians, administrators and other third parties. Operational issues may result in data quality errors. Internal data supply-chains will also be disrupted. Data owners should monitor sourcing and quality of critical data and take mitigation actions. Review SLAs and engage pro-actively with third-parties to address concerns. If you have a documented data lineage, use it to quickly identify the most risk-prone areas of the data landscape, and establish targeted tactical controls and tactical monitoring to spot issues early.

4. Deliver tactical outcomes using existing tooling

Many regulators now require daily reporting of potential liquidity risks. Government fiscal changes may have significant finance and tax implications. Businesses need to review product ranges and understand customer impacts. In all these areas, data scientists are at a premium, so you may deploy your people to work directly with impacted teams to create short-term tactical solutions using existing tooling. If so, ensure that these are documented suitably and sandboxed in your controls environment, set a date to review/retire, and use the opportunity to identify data quality (DQ) gaps.

5. Keep the long-term opportunity in mind as you re-assess your change portfolio

In a period of economic shock and subsequent contraction, it is natural and appropriate to review planned and in-flight change programmes. However, programmes ought not to be stopped which will contribute to a long-term improvement in your organization’s ability to grow revenues, manage risk or reduce cost. You may consider re-prioritizing programmes to ensure that tangible business benefits are delivered quickly and regularly to ensure continued senior leadership support, and you should articulate clearly how these programmes support the business strategy.

6. Plan for sustained, high rates of staff absence

Even before COVID-19, data teams were particularly impacted by the forthcoming IR35 rules on contractors. On top of this, there is still a real risk of a much more significant outbreak of the virus causing widespread sickness. You may wish to arrange contingent arrangements with consultancies and vendors to provide resource augmentation should it become necessary. Consider how technology provision and on-boarding can be prepared in advance to accelerate this.

7. Don’t miss out on key government support, including tax rebates on technology R&D

Governments around the world have made significant fiscal commitments to support organizations through COVID-19, but you should also consider existing programmes. The UK R&D Tax Relief scheme provides an effective relief rate of up to 10.5% for large companies on applicable development spend, including consultants’ fees and necessary software licenses. This may significantly improve cost-benefit assessments as you consider the value of investing in data.

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Summary

The COVID-19 situation has challenged every assumption about how our organizations operate and about what we can achieve. It is now clearer than ever that organizations can achieve vastly more together – by pooling their talents and expertise – than they can apart.

That means collaborating with your entire ecosystem, working with FinTechs, traditional technology providers, fund administrators and consulting firms to bake in compatibility across the landscape, to embed effective controls and joined-up governance, and to co-create AI- and machine learning-powered products and solutions that will support the long-term growth of your business.

About this article

Authors
Mahesh Shahapurkar

Director, Financial Services Consulting, Ernst & Young LLP

Passionate about leveraging data and analytics to deliver business growth. Technology enthusiast. Avid badminton player.

Phil Tattersall

Associate Partner, Wealth & Asset Management Technology Consulting, Ernst & Young LLP

Passionate about the positive impacts we can make across the industry one project at a time. Husband and father of two. Football fan.