Latest News: On December 2nd, the National Financial Regulatory Administration’s (NFRA) Dalian Bureau issued 4 “penalty notices,” fining 4 banks including Bank of Dalian for inadequate rectification of data quality issues, with combined penalties totaling 650,000 yuan. More notably, 3 technology department heads received warning disciplinary actions. This is not an isolated case – throughout this year, multiple banks have been penalized for data quality issues. Why do data quality problems repeatedly become the focus of regulatory enforcement?
**Revealed: What Exactly Is “Data Quality” in Banking?**
In financial regulation, bank data quality primarily refers to the accuracy, completeness, and timeliness of various data reports submitted to regulatory authorities. This data is submitted through channels such as the EAST system (Financial Industry Statistical Information Monitoring and Reporting System) and serves as a crucial window for regulators to understand banks’ operational conditions and assess risks.
Common data quality issues include: delayed submission of regulatory statistical data, omission of key data fields, and inconsistent data logical relationships. These seemingly technical issues reflect banks’ weaknesses in data governance capabilities.
**Why Do Regulators Have “Zero Tolerance” for Data Quality Issues?**
Data quality issues are not merely “reporting errors” – they directly impact regulatory effectiveness:
* • Inaccurate data interferes with financial risk monitoring and early warning
* • Incomplete data affects the authentic assessment of financial institutions
* • Untimely data delays regulatory decision-making
From the banks’ perspective, data quality issues often reflect deeper problems:
* • Indicates whether internal governance mechanisms are sound
* • Reflects the success of digital transformation
* • Exposes strengths or weaknesses in risk control capabilities
**Data Governance: Where Are the Challenges?**
While data governance appears to be a technical issue, it is actually a complex systematic project. Banks face three major challenges:
First, there’s significant historical burden. Business systems accumulated over years are intricate, with “information islands” existing between systems built in different periods, inconsistent data standards, and difficult integration. Some banks are still using core systems built in the 1990s, with outdated underlying architecture and costly renovation needs.
Second, business departments show insufficient cooperation. Data governance requires substantial human resources from business departments for data cleaning, verification, and maintenance, but these tasks are often viewed as “extra burden,” lacking motivation. Data management responsibilities are unclear, with buck-passing being common.
Finally, there’s a significant talent gap. Data governance requires compound talents who understand both technology and business operations. Such talent is scarce in the market and takes long to cultivate. Banks often find themselves at a disadvantage in talent competition, struggling to recruit and retain top professionals.
**Why Do Banks Lack Internal Motivation?**
Despite strict regulation, banks generally lack internal motivation for data governance, for reasons worth considering:
From a cost-benefit perspective, data governance requires massive investment but shows little short-term benefit. A complete data governance system requires substantial funding for system construction and talent recruitment, but these investments rarely show direct returns on financial statements. In contrast, traditional business expansion and product innovation bring more immediate returns.
Regarding performance assessment, data quality issues often only receive attention when problems arise. Data governance typically carries low weight in banks’ performance evaluation systems. Unless major issues lead to regulatory penalties, it rarely affects departmental or individual performance assessments. This leads all levels to tend to invest limited resources in areas where achievements are more easily demonstrated.
This inertial thinking of “prioritizing development over management” causes most banks to address data quality issues in a reactive rather than systematic manner, making it difficult to establish systematic, normalized data governance mechanisms. They often only rush to make corrections when regulatory penalties arrive, treating symptoms rather than root causes.
**Solution Path: How Can Banks Enhance Data Governance Capabilities?**
Facing strict regulatory requirements, banks need to enhance data governance capabilities across multiple dimensions:
**Organizational Structure Level:**
* • Establish Chief Data Officer position
* • Form professional data governance teams
* • Build cross-departmental collaboration mechanisms
**Technical System Level:**
* • Upgrade data processing platforms
* • Strengthen data quality control
* • Implement automated verification
**Future Outlook: New Trends in Data Governance**
With the development of fintech, data governance will enter a new phase:
* • Intelligent data governance becomes the trend
* • Real-time monitoring becomes standard configuration
* • Data governance capability may become a core competitive advantage for banks
[Note: EAST system refers to a specialized regulatory reporting system used in China’s banking sector]
