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The flip side of the CDO story | #MITIQ

David Saul - MITCDOIQ 2014 - theCUBEAs as is happening with other regulated industries, the financial services sector is seeing a sharp increase in the number of chief data officers at the top of the business, but some companies are still going against the flow – and succeeding. One of the most notable examples is State Street Corporation, where the task of addressing the rapid growth in unstructured information has been relegated not to a CDO but rather chief scientist David Saul, who oversees all aspects of technological change throughout the organization. He dropped by SiliconANGLE’s theCUBE at MIT’s recently concluded CDOIQ Symposium to share how the industry’s hottest trends and analytics in particular are shaping his firm’s IT roadmap with hosts Dave Vellante and Paul Gillin.

The Boston-based  State Street is the second oldest financial institution in the United States and among the largest in the world in terms of assets.  The buy-side giant claims to have over $28 trillion under management in its primary custodian business and another $2.3 trillion or so in its investment services unit, which adds up to a lot of responsibility for management to shoulder.  Saul, who has held the title of chief scientist since the unique position was created four years ago, is charged with elevating that formidable challenge through the identification and implementation of new solutions that can help meet business objects more effectively.

State Street has always been persistent in trying to stay on top of the trends, he highlighted. The firm counts itself as one of the very first global financial powerhouses to adopt cloud computing at the organizational level, a move that opened the way for new initiatives that would have been more difficult if not impossible to support in a legacy environment. The many fruits of the transition include Springboard, the company’s mobile service, which allows clients to check their investment portfolios directly from their tablets.

Even more notable than the app is State Street’s internal social network, which Saul said enables employees to communicate and collaborate with one another across its dozens of geographically distributed offices.  Setting up the platform was a complex undertaking, not least of which because the firm required that the software provide integration with the  file sharing technologies that were already used prior to the roll-out.  “We didn’t want to go through a major tool become that comes back to the cultural point, if people were satisfied with using a particular tool we wanted to make sure that tool is included in the portfolio,” he explained.

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Data is the superseding priority

 

But as important as they may be in their own right, State Street’s cloud, mobile and social projects take backseat to its data focus, which Saul described as the superseding priority.  “A lot of it comes back to the data: where does the data reside, are we able to maintain control over it, are we able to maintain security, privacy and all of that.”

The firm takes a calculated and savvy approach to tackling those requirements, dividing the agenda into two distinct but interlaced parts. The first is tapping into existing customer data and new external sources, which is where the business value lies, and the other is addressing the risk that comes with it. Historically, financial services providers handled those tasks separately, but Saul pointed out that it’s now possible to converge the two processes leveraging data semantics.

“The companies that are gonna be able to get synergy between data analytics and risk management are those that won’t put them in silos and treat them as two separate things,” he remarked.“If we can map those data sources and get at what they mean we can get double duty out of it so there is no reason why we should completely separate the data analysis from the risk management.”

Integrating the different pieces of the information governance puzzle into a unified whole can go a long way towards making it easier for  financial institutions to pinpoint the exact origins of a dataset and what if any modifications have been made to it, Saul elaborated. That has the potential to simplify fraud detection by a great deal and, in the bigger picture, provide increased transparency that could allow for better enforcement of best practices throughout the entire industry. But that requires more comprehensive standardization.

“There’s a multiplayer effect if we have industry standards for semantics because it means we can exchange with our clients and even more importantly, the regulators,” he said. “Think about the problems regulators have when they ask for information and they get it in different formats.” Improved regulation means increased trust in the system, which Saul said has been proved to foster investment and thereby drive broad economic benefit.

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