Cognizant White Paper
Proactive MDM: Marrying Master Data with
Operational Processes to Elevate Business Value
Executive Summary Proactive MDM
As the concept of master data management As so often happens with new technologies and
(MDM) has evolved and risen to mainstream methodologies, the banking industry is at the
status, most MDM implementations have focused forefront of harnessing the benefits of MDM,
on improving the quality of critical corporate data, although companies in insurance, life sciences
creating a single version of the truth and and retail are quickly following suit. Banking
improving analytics. In organizations are beginning to look beyond
In the banking space, most of these scenarios, MDM’s traditional benefits of delivering
proactive MDM performs not the MDM hub acts as an improved cross-sell/up-sell opportunities,
enabler for other enter- enhanced customer insight, multi-channel
just the familiar data cleansing,
prise applications, such integration, etc. They now see MDM as an
standardization and as customer relationship enabler for performing many important business
de-duplication routines; it also management, supplier processes more efficiently. Performed by or with
impacts the business processes relationship manage- the support of MDM, processes such as account
ment and enterprise opening and payment processing are inherently
that integrate tightly with ongoing
resource planning. This more efficient, robust and scalable than before.
transactions, thus producing a approach is overly con-
“living” single version of the truth. straining and has made One of the biggest challenges of implementing a
it difficult for businesses customer-centric operational process is that
to see returns on value of their MDM initiatives. It customer data is usually stored across several
has challenged organizations to do a better job lines of business (LOBs), often in several different
developing business cases and ROI models to jus- data repositories. Even within a single LOB, there
tify funding for their MDM programs. might be numerous databases and systems
charged with handling front-office, middle-office
This white paper explores ways to use MDM and back-office functions. This has resulted in
proactively across numerous business multiple data records of the same entity, a far cry
processes. While we focus on banking and from the single version of the truth.
financial services, as well as our experience with
helping one major European bank optimize its In the banking space, proactive MDM performs
use of MDM, we also share ROI lessons for not just the familiar data cleansing,
companies across all industry verticals. standardization and de-duplication routines; it
also impacts the business processes that
Reactive MDM vs. Proactive MDM
Reactive MDM Proactive MDM
Does not address process issues around managing Ability to handle master data business
master data. process issues.
Uses a “centralized” or “co-existence” architecture. Mostly uses a “transactional” architecture.
Mostly used for “analytical” MDM. Mostly used for “operational” MDM to perform
Most integrations and data exchanges are Most data exchanges with business applications --
run in batch mode. such as multi-channel front-end, Internet banking,
product processor, payment processing, sanctions
screening, call center, middle-office -- are run in
real-time or message queuing.
A “washing machine” for wrong data. “First time right” and other new ways of working and
defining the right data with the right people.
Business involvement only when a data error occurs; The business owns and understands its data assets.
correction managed by IT. Data is back where it belongs: in the business.
integrate tightly with ongoing transactions, thus MDM can eliminate the creation of duplicate cus-
producing a “living” single version of the truth, tomers during the on-boarding process. For new
presented in real-time to business users and/or customers choosing several products, MDM avoids
customers at multiple touch points across the the creation of multiple customer instances dur-
spectrum of customer contact channels (e.g., ing the account opening process. MDM essentially
branch, Web, call center, etc.). In other words, orchestrates the customer on-
MDM has evolved from an impatient teenager to boarding process and -- based on MDM essentially
a more mature adolescent (see Figure 1, above). the type of customer and product
orchestrates the customer
Selected examples of this chrysalis stage of selections -- provisions the cus-
MDM maturity include: tomer data to different product on-boarding process
processor and account origination and -- based on the type
I Customer on-boarding and account opening. systems. This customer on-board- of customer and product
I Customer registration for online banking ing process is faster, more efficient
selections -- provisions the
applications. and customer-friendly.
customer data to different
I Risk profiling and Know your Customer (KYC)
The customer on-boarding product processor and
process involves multiple users, account origination systems.
I Payment processing. sub-processes and multi-level
workflows. A business process
Let us explore the benefits of operational MDM management (BPM) engine can work with MDM
for customer data -- with its ability to perform to orchestrate all on-boarding processes,
certain business processes -- in four different, control the workflow and store the interim data
real-world banking scenarios as successfully before the golden copy is created in MDM.
implemented by one of Europe’s leading
banking organizations. Benefits
I Customer data is mastered directly in the
Use Case A: Customer On-Boarding MDM hub, eliminating the need for other
source systems of customer data.
MDM can provide more value when customer on-
I A single source of customer data ensures that
boarding is performed directly in the MDM hub. By
accurate, up-to-date information is available
using its sophisticated match/merge capabilities,
to all downstream systems in real-time.
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Customer On-Boarding Via an MDM Hub
User interface, which is used Customer details (name,
Existing System to interact with the MDM hub address, identification
for any modifications. proof, others).
Front End UI
Opening BPM Front office
System Engine takes data from
enters it through
Customer master data is stored the front end.
Processor with all application fields. Unique
customer ID is generated.
Bank account number
Product is generated.
Customer data Customer on-boarding
Customer provisioning & maintenance
How to Think Proactively About MDM
Answering the following questions may different silos leading to siloed informa-
help determine MDM timing, effort and tion and duplicate records?
investment: 8. Are your cross-sell and up-sell opportu-
1. Do your customers complain of dis- nities limited, due to siloed customer
parate information at multiple touch data?
points? What is the effort to reconcile 9. Is your organization ready for new com-
the disparate information? pliance regulations touching on cus-
2. How long does it take you to on-board tomer data?
customers? 10. Does your enterprise data warehouse
3. Are changes in master attributes reflect- consolidate 360-degree customer data
ed on all your downstream applications? for reporting and analytics?
4. How accurate are your customer risk- MDM has transcended its initial reactive
profiling routines? purpose of providing high-quality, complete
5. How many duplicate records are in the and trusted corporate data, to being a
system? What is the business impact of proactive business enabler. This is clearly
having these duplicate records? occurring in the banking industry, where
6. Would you like to speed up your pay- major players are leveraging the process
ment processing timeframes? improvement opportunities that MDM
helps generate for increased business
7. Are the middle office and front office in
efficiency and customer service.
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MDM as Single Customer Data Repository for Internet Banking
Customer chooses to use online banking
Customer-provided information services to modify/update his service
is stored directly in the MDM requests and personal information requests
hub, which is referenced by (information modification is role-based).
Existing System the middle office.
ETL MDM Hub
System Call Center
Customer-provided information is
stored directly in the Customer can
MDM hub, which is referenced choose any of the above
by the call center. online services.
Middle & back office Customer registration
Data acquisition services
integration & administration
I The customer on-boarding process is faster administration, servicing various banking
and more efficient because of MDM playing a services such as cash management, treasury or
centralized role. payments. The MDM hub acts as the repository
I Other bank processes, such as KYC and risk of enterprise customer data and the data about
management, can directly access data from individual customer product holdings, serving as
the MDM hub as soon as the customer’s pro- the trusted source of customer data. The
file has been entered. Internet banking channel consumes various
MDM services when providing customer and
I As all customer profiles are generated in the
account data to different applications such as
MDM hub, there is no duplication of customer
customer registration, administration, cash
records. Each customer entry is checked for
management, etc. MDM provisions customer and
duplicates before a unique MDM ID is
account data to these applications in real-time,
assigned to it.
enhancing the efficiency of these applications.
I Customer service is improved at all touch
points through the single view of the cus- Benefits
tomer. I Customer data mastered in the MDM hub can
I New data requirements on the customer be used in real-time by various Internet bank-
model can be implemented directly at differ- ing applications for other bank processes.
ent levels of the organization. I The time required to carry out bank process-
I Data ownership is clarified. Business people es is reduced, leading to higher efficiency and
know what they have to do; for instance, that improved customer satisfaction.
they don’t need to fill out a complete cus- I In the MDM hub, master data can be updated
tomer sheet but only their own partition. from various source systems, such as the call
center, the middle office, the back office, etc.,
Use Case B: Customer Registration which ensures that accurate, up-to-date infor-
and Administration for Online Banking mation is available at all times.
I This approach also helps in effective BI,
MDM can be used in an Internet banking
reporting and analytics by providing com-
application for customer registration and
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Real-Time Risk-Profiling and KYC Checks via the MDM Hub
KYC parameters can be modified
as per the rules set by the
Existing System regulatory body and the business.
Customer User interface for KYC (name, address,
proof, others). Front office
takes data from
Account customer and
enters it through
Systems MDM Hub
the front end.
Product Scoring is based on stored
risk attributes in the risk engine to
validate KYC compliance and record
the account as per process.
Synchronization Risk profiling and KYC processing Customer data capture
plete, consistent and timely customer data to is completed. MDM can also be used to
data warehouse and analytics systems. parameterize risk scores.
I All data integration issues are captured, such
By centralizing all these important business
as AC Nielsen indicators and Dun &
processes in MDM, the resulting gains in efficiency
Bradstreet numbers. A single interface is pre-
and accuracy -- accurate risk scoring, reduced
sented to the outside world.
process redundancy during customer on-boarding
I A single version of the truth for customer and KYC, as well as faster KYC process completion
data enables banks to execute their business -- can generate significant cost savings.
processes in a more efficient way.
Use Case C: Risk Profiling and KYC I While on-boarding the customer, the data can
be shared with the KYC module and the risk-
The advantage of managing customer on- profiling engine, ensuring that the bank
boarding within MDM can be extended by immediately knows the accurate risk score
running risk-profiling and associated with the customer.
In the absence of KYC checking processes in I The risk score can be parameterized, and the
consolidated data, banks run MDM, enabling regulatory criteria can be changed over a period of time.
mechanisms and product
large-scale manual operations decisions for all banking I This solution approach supports various
teams, thereby increasing products in real-time. A banking compliance requirements, such as
costs and processing time and proactive MDM solution can AML, FSCS, sanction screening, etc.
reducing their ability to be extended to calculate the I KYC helps organizations create better customer
risk score of the customer segmentation, as well as more focused and
deliver faster and better from the data acquired
cost-effective sales and marketing campaigns.
services to their customers. during customer on-
I A centralized version of risk-profiling, instead of
boarding. Based on the risk
different spreadsheets stored in LOBs, elevates
score, a subsequent routine can perform a KYC
operational efficiency and eliminates errors.
check before the customer on-boarding process
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Providing Consolidated Customer Information Across the
Payment Processing Ecosystem
Processed Payments Processing
Engine FX (foreign
Sanctions Funds Control Account
(regulatory Billing Notification
(pay/no pay) Posting
Customer, account, portfolio
and preference information
Use Case D: Payment Processing compared with the use of multiple different
aggregator systems across geographies and
To deliver quick and effective payments process- business functions.
ing, banks need to ensure that sanctioning, I By having a central repository with a single
funds control, billing and notification capabilities
version of the truth and a secure business
work seamlessly. The process faces numerous
process for maintaining customer data, the
challenges, such as a lack of reliable, consolidat-
customer data used for invoicing is accurate
ed information from numerous legacy systems
and, therefore, will lead to compliance with all
that store customer, accounting and other relat-
the standards required for
ed information. In the absence of consolidated
accurate payments (the right
data, banks run large-scale manual operations Across industry, it has
information on the invoice).
teams, thereby increasing costs and processing become easier to justify
time and reducing their ability to deliver faster
funding for MDM projects
and better services to their customers. Mastering MDM
as they are now seen as a
A proactive MDM solution enables an MDM has come a long way since platform capable of carrying
organization to consolidate information across a its inception. Customer data hubs
out core business processes
large number of systems, improve data quality complement BPM and enterprise
application integration. Proactive on top of mastering critical
and deliver timely information to the various
sub-processes in the payment processing eco- MDM is leveraged to manage business data.
system. This type of MDM solution not only cuts business processes across
the required time and effort, but it also reduces various business functions more effectively. The
customer dissatisfaction over delayed payments. MDM hub for customer data maintains the
customer record in real time. MDM is now being
Benefits used in conjunction with CRM solutions and
customer data transaction systems to help
I Accurate customer data and complete trust in
companies derive maximum value from their IT
the data coming from the MDM hub leads to
investments. Proactive MDM solutions provide a
front end through which master data can be
I The cost of conducting payments is lower managed.
when a single global system is maintained,
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