With Scrutiny of Bank Tightening via Stress Tests, Data Quality Will Be Instrumental To Success
Recently, the Bank of England published its third concurrent stress test results of the UK’s banking system. Based on the Bank’s new approach, this stress test is perhaps the severest yet in examining the resilience of the banking system. Data plays a critical role in the complex process of stress testing, and most stress tests are conducted wholly or partially via spreadsheet-based models in banks and financial institutions. The issue is that the use of these spreadsheets and other end user computing (EUC) applications is uncontrolled, which potentially threatens the integrity of data used and therefore the accuracy of output from the stress test models.
Banks and financial institutions, who invest heavily in IT systems, are comparatively lax in the management of their spreadsheet and EUC landscape, even though it underpins their regulatory compliance and model governance initiatives. In particular, IT departments in banks prefer the use of enterprise business applications, so gaining their mindshare for proper use of spreadsheets is often a challenge. Nevertheless, aware of the reasons of why users are drawn to EUCs, regulators are now demanding that banks demonstrate transparency around the ecosystems of tools that feed their stress test models.
The full article, as published in Global Finance & Banking Review, explains why it is essential that banks and financial institutions address EUC management. You can view the article via the link below.Read the full article
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