Collaboration is key to a safer financial system for all: Through data pooling and anonymous benchmarking, banks can better manage their operational risk and controls.
Big banks are embracing a platform that promotes industry-wide standards for operational risk management. JPMorgan, Citi, BNP Paribas, Barclays, and Lloyds Banking Group all just contributed to a $24 million investment in operational risk data network Acin.
Financial institutions can digitize and ingest their operational risk data into Acin’s network, allowing them to compare it to that of their (anonymized) peers. Sharing data into a standardized, collaborative library ultimately helps them discover and prioritize changes they can make to become safer or more efficient.
Traditionally, banks have hired consultants to achieve these results by digging through their documentation “to complete lengthy and costly benchmarking programs,” Acin’s chief revenue officer, Kieron Sambrook-Smith, told Insights Distilled. But the firm’s system automatically “turns documents into data” to analyze how an institution’s risk controls (around cybersecurity, anti-money laundering, or ESG regulations, for example) stack up, more easily and at a lower cost.
The idea is that by effectively crowd-sourcing risk management controls data, banks can tap into the wisdom of the crowd to fill their own gaps and improve their systems. The strategy of aggregated, anonymized data for wider industry insights also has uses in fighting fraud as well as advertising.