Northern Trust’s Data-Driven Transformation: Integrating the Human and Technology Dimensions

Logo or sign for Northern Trust bank on side of office building in Canary Wharf, Docklands, London, England Photocredit: Getty

Logo or sign for Northern Trust bank on side of office building in Canary Wharf, Docklands, London, England Photocredit: Getty

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Northern Trust has a long and storied history. Founded in Chicago in 1889 to provide trust and banking services to the rapidly growing city’s emerging business class, Northern Trust is today a Fortune 1000 company with offices in 20 states and 23 international locations. The firm currently services more than $10 trillion in assets for corporations, institutional investors, and high net worth customers.

As Northern Trust continues to position itself as a leader in financial services such as fund administration and accounting, global custody and middle-office services, it has focused increasingly on data-driven solutions to compete in today’s rapidly changing financial services marketplace. Northern Trust has been a leader in the use of blockchain in fund services and is undertaking an ambitious overhaul of its technology and operations infrastructure to match the innovations introduced by fintech entrants, tech giants, and incumbent market leaders in recent years. At the center of Northern Trust’s transformation is an effort to forge a data culture that that can be readily responsive to evolving customer needs.

Sanjay Saxena has a big job. Sanjay is senior vice president for enterprise data governance at Northern Trust. His responsibilities include helping the firm manage data as an enterprise asset, ensuring data quality and data standards, and establishing an enterprise data governance function for the three core business lines – wealth management, asset management, and asset servicing, which includes fund accounting and custody services. That data is a priority for Northern Trust is evidenced by the demonstrated executive management commitment, with the enterprise data management function reporting to the firm’s chief information officer.

Northern Trust’s Saxena possesses a healthy perspective on what data-driven transformation requires in order to be effective. Regarding data governance, he characterizes the mandate as “an enabling function, not a controlling function,” and describes a centralized operating model that is designed to support “business-facing transformation.” He cites several notable successes that have been achieved to date:

  • The fund accounting process has been automated and streamlined, driven by data, to enable “straight-through processing with minimal manual intervention.” Saxena remarks, “instead of looking at lots of data manually, we have systematically reviewed our processes so that we are validating data at the sources”;
  • The process of incorporating vital market and transaction data has been streamlined to “move controls upstream,” ensuring the data is validated throughout the process. He cites as an example the process of calculating Net Asset Value (NAV), where hundreds of variables can factor into NAV pricing. By automating workflows, and removing data tasks from the fund accountant, Northern Trust will be able to realize significant benefits, including a more efficient routing of exception cases using workflow-based technologies.

Saxena attributes much of the success that Northern Trust has been able to realize in its data-driven business transformation effort to several critical business partners, among them IBM. He notes that Northern Trust has developed a robust enterprise data platform which leverages the latest Big Data technology approaches. The firm has created a data lake supported by real-time data ingestion that incorporates the ability to stream data for analysis and reporting. The firm is also piloting a series of AI and machine learning business use cases that it hopes to move into production in the coming years. Saxena cites Northern Trust’s close partnership with IBM, which has deployed its Infosphere solution for data governance and master data as a foundation for the data platform.

Inderpal Bhandari is the Global Chief Data Officer for IBM, charged with implementing a CDO function across the firm, and bringing the benefits of this experience to IBM customers like Northern Trust. Bhandari possesses a practitioner’s perspective, having previously served as CDO at Medco, Express Scripts, and Cambia Health Solutions. In establishing a foundation for what he describes as “the AI enterprise”, Bhandari has implemented the same process within IBM (“eating our own dinner”), which he now shares with IBM customers to guide them in their own data transformation journeys.

Within Northern Trust, Saxena’s organization has leveraged these IBM capabilities to support critical data privacy initiatives, including mapping out “sensitive data elements”, and supporting new Global Data Protection Regulation (GDPR) requirements. Northern Trust has also used the IBM Bluemix platform to pilot the acceleration of metadata management using Machine Learning technologies. Saxena sums up, “a strong data governance foundation enables all of these efforts”.

Most importantly however, Saxena observes it is the “integration of the human and technology dimensions” which ensures successful business adoption and tangible business outcomes. By human dimension, Saxena explains the necessity of “building a culture of data” where there is clearly defined accountability, responsibility, and ownership for data. He describes his work on establishing a “data-owner network”, and elaborates, “it’s about having the “right source, the right quality, the right funding model”.

This is the holy grail, notes Saxena, where core accountability is achieved, and the organization becomes self-enabled. Saxena understands that this is an ongoing process, a journey, and that it’s by combining the human dimension with the technology dimension, that enables businesses to achieve data-driven transformation and measurable business results. Northern Trust has built the data foundation and its journey is now well underway.

[“source=forbes”]