Cognizant White Paper

          Proactive MDM: Marrying Master Data with
          Operational Processes to Elevate Bu...
Reactive MDM vs. Proactive MDM

                       Reactive MDM                                           Proactive MD...
Customer On-Boarding Via an MDM Hub
                                           User interface, which is used              ...
MDM as Single Customer Data Repository for Internet Banking
Real-Time Risk-Profiling and KYC Checks via the MDM Hub

Providing Consolidated Customer Information Across the
                              Payment Processing Ecosystem

While none of the use cases at the                                                          I   Elimination of multiple re...
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Proactive Master Data Management (MDM)


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How more proactive use of master data management across numerous operational processes, particularly in banking and financial services, can advance business goals.

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Proactive Master Data Management (MDM)

  1. 1. 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 white paper
  2. 2. 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 business processes. 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. Figure 1 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 checking. 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. white paper 2
  3. 3. 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). Customer UI System Account Middleware Middleware Front End UI Opening BPM Front office MDM Hub System Engine takes data from customers & enters it through Customer master data is stored the front end. Product Processor with all application fields. Unique customer ID is generated. Bank account number Product is generated. Approval System Customer data Customer on-boarding Customer provisioning & maintenance consumption Figure 2 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. 3 white paper
  4. 4. 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. Middle Online Customer Banking System Office Online Banking CRM Middleware ETL MDM Hub Payments & BTR Account System Call Center FX 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 Figure 3 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 white paper 4
  5. 5. 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 details Customer User interface for KYC (name, address, On-boarding Systems identification proof, others). Front office takes data from Account customer and Middleware Middleware Opening Front End enters it through Systems MDM Hub the front end. Product Scoring is based on stored Processors risk attributes in the risk engine to validate KYC compliance and record the account as per process. Product Approval Systems Risk Scoring Engine Synchronization Risk profiling and KYC processing Customer data capture Figure 4 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. Benefits 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 5 white paper
  6. 6. Providing Consolidated Customer Information Across the Payment Processing Ecosystem Payments Payments Processed Payments Processing Payments Engine FX (foreign exchange) Sanctions Funds Control Account (regulatory Billing Notification (pay/no pay) Posting check) Customer, account, portfolio and preference information CDI Hub Figure 5 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 faster payments. front end through which master data can be I The cost of conducting payments is lower managed. when a single global system is maintained, white paper 6
  7. 7. While none of the use cases at the I Elimination of multiple redundant customer aforementioned major European bank have data stores in the longer term. gone live, this client (with our help) is well along in creating an MDM infrastructure to help Across industry, it has become easier to justify realize the following objectives: funding for MDM projects as they are now seen as a platform capable of carrying out core I Simplification of the current customer data business processes on top of mastering critical management landscape. business data. The benefits of MDM are realized I A single identification number for all during the implementation cycle rather than customers/legal entities. after it. With the onset of proactive MDM, companies can accelerate their ROI. Importantly, I Management of customer hierarchies to the benefits are tangible, immediate and support risk management and servicing. substantial. Immediate benefits include: I A single global source of customer data, holding core data attributes and registration I Accurate customer identification. data alongside product holdings/pointers. I Scalable platform for a 360-degree view of I The ability to manage the movement of customers with product holdings to service customer data between providers and commercial customers, globally. consumers of the data. I Platform for customer on-boarding, tightly I Ability to identify and service a customer integrated across channel applications (self- globally. service and assisted, as well as customer desk I Ability to satisfy regulatory requirements management) and risk management. regarding the global exposure of a large, complex corporate client. About the Authors Souparna Giri is a Senior Business Consultant with Cognizant’s MDM Practice, with seven-plus years of experience in the IT field. Souparna has a Bachelor’s Degree in mechanical engineering from Bengal Engineering College, an MBA in marketing from Great Lakes Institute of Management, as well as rich domain experience in customer relationship management and master data management within the banking and financial services industry. His expertise spans MDM strategy, assessment and roadmap creation; business process modeling; data governance; business process understanding and feasibility studies; vendor evaluation; gap analysis; requirements analysis; functional specification design; and MDM implementation and program governance. He can be reached at About Cognizant Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting and business process outsourcing services. Cognizant’s single-minded passion is to dedicate our global technology and innovation know-how, our industry expertise and worldwide resources to working together with clients to make their businesses stronger. With over 50 global delivery centers and more than 85,500 employees as of March 31, 2010, we combine a unique global delivery model infused with a distinct culture of customer satisfaction. A member of the NASDAQ-100 Index and S&P 500 Index, Cognizant is a Forbes Global 2000 company and a member of the Fortune 1000 and is ranked among the top information technology companies in BusinessWeek’s Hot Growth and Top 50 Performers listings. Start Today For more information on how to drive your business results with Cognizant, contact us at or visit our website at World Headquarters European Headquarters India Operations Headquarters 500 Frank W. Burr Blvd. Haymarket House #5/535, Old Mahabalipuram Road Teaneck, NJ 07666 USA 28-29 Haymarket Okkiyam Pettai, Thoraipakkam Phone: +1 201 801 0233 London SW1Y 4SP UK Chennai, 600 096 India Fax: +1 201 801 0243 Phone: +44 (0) 20 7321 4888 Phone: +91 (0) 44 4209 6000 Toll Free: +1 888 937 3277 Fax: +44 (0) 20 7321 4890 Fax: +91 (0) 44 4209 6060 Email: Email: Email: © Copyright 2010, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or oth- erwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners.