Unfortunately, within our industry, an unintended consequence of implementing new digital tools is often the creation of data silos, which are becoming a more common obstacle for firms to tackle.
However, many of the issues with data silos could be mitigated by simply finding ways of understanding and managing data in a more efficient way.
To do this, we need to look at how data silos are created, the issues they cause and the best way to combat this persistent challenge for the financial planning industry.
What is a data silo?
A data silo is essentially a store of raw information that can be accessed by one department in a business but is fully segregated from the rest of the organisation.
They tend to occur when teams or departments across a financial planning firm have different goals and do not have their technical priorities aligned. They are looking for a solution to one particular issue but not looking at its role in the context of the wider business and their full technology stack.
One example of a data silo within our industry could be two different systems that store the same type of data. For instance, storing client data into a customer relationship management software without ensuring that it integrates with the company’s client portal system.
In this instance, a data silo will trigger an unnecessary duplication of data such as client name, address and so on, causing confusion regarding data accuracy and integrity.
What problems do silos cause?
At an organisational level, data silos can inhibit accessibility, automation and transparency within a business.
Losing track of client journeys, data inaccuracies, over-utilised storage spaces, data reporting challenges and the inability to create digital collaborative spaces are all potential negative consequences of the existence of data silos.
Managing data is proving to be a challenge for many financial organisations. From constantly tracking client emails to the capture of information buried in client-facing documents, firms need to continually adapt their data initiatives in order to gain competitive advantage and completely eliminate all existing data silos.
Overcoming data silos
Centralised digital platforms
One of the most effective ways of eliminating data silos is to avoid creating them in the first place.
For companies embarking on their technology journeys, the introduction of centralised digital platforms from the outset is a great way to keep all the company’s teams and objectives aligned. The primary aim for every tech leader should be to build the right ecosystem for the company to streamline all its data and processes.
Bringing all data points into one platform will improve reporting capabilities, create opportunities for process automation and drastically enhance data accessibility across the business.
Integration tools
As any company grows and evolves, new technological necessities will arise and this gradually increases the number of applications in their technology infrastructure. Often, many of these legacy systems will have been built to act as standalone applications, making it very difficult to extract information and distribute it across the business.
This is where integration tools come into play.
Industry tools or IPAAS (integration platform as a service) are solutions that empower companies to connect and integrate their business applications, enabling automatic synchronisation across the entire tech stack.
Tools like Zapier or Power Automate bridge the gap between business applications, keeping data updated in real-time across multiple areas, thereby combating the creation of data silos.
Company culture
This may seem like a surprising ally in the war against data silos but a collaborative company culture can also help to clear the roadblocks preventing an organisation from becoming a data-driven business.
Setting up a data governance team, sorting through existing outdated data or organising workshops to understand system capabilities all go a long way in establishing a proactive data-sharing environment.
By signalling the importance of a longer-term and broader perspective to their teams, financial planning firms can empower people to break down existing data silos and prevent future silos from forming, unlocking the full capability of their data.
The introduction of new digital solutions into their businesses enables wealth firms to generate more comprehensive client data, streamline the major financial advice processes and deliver exceptional client outcomes.
But it is vital to remember that data is the foundation on which these achievements are built, so managing data in an efficient way and keeping those technical priorities aligned must always take precedence.
David Gorgan is a business innovation analyst at Progeny
