State Street Tests a 'Rosetta Stone' for Bank Databases

State Street Tests a ‘Rosetta Stone’ for Bank Databases

State Street Tests a ‘Rosetta Stone’ for Bank Databases

Anyone who's ever worked on a technical standard knows it can be thankless, unrecognized effort.

But David Saul, chief scientist at State Street, believes what he and his bank are doing with a little-known data standard called Financial Industry Business Ontology could change much about the way risk management, financial product pricing and even marketing are handled today, and make blockchain technology feasible for banks.

"The work we're doing on FIBO is a prerequisite to doing anything with algorithms," said Saul, who was one of American Banker's Innovators of the Year in 2013. "First you have to get the data right, and that's the whole point of FIBO and what we're doing with our proof of concept."

FIBO provides a description of the structure and contractual obligations of financial instruments, legal entities and financial processes. It's used to harmonize data across repositories, kind of like a Rosetta Stone for banks' databases. It's expressed in machine- and people-readable language. It allows for the consistent tagging and formatting of data across an organization and an industry and could allow many things to be automated that today must be done by humans.

Read Also:
How Machine Learning Makes Databases Ready for Big Data

"Every bank has master files that define the terms, conditions and characteristics of their financial instruments," explained Michael Atkin, managing director of the EDM Council, a trade association that's been the main driver of the standard. (That stands for "enterprise data management," by the way, not "electronic dance music.") "The first requirement is to map it to common meaning, so we're all calling things the same names. That's our part, the humble ontology."

Some of the goals Saul and others have for FIBO echo what's hoped from blockchain technology: the ability to reframe financial transactions as self-executing "smart contracts"; the ability to execute transactions between banks without a need for middlemen or a clearinghouse; the ability to completely automate complex products like mortgages and over-the-counter derivatives; and the possibility that all parties could have complete transparency around deals. Indeed, FIBO and blockchain may eventually be interdependent: For distributed ledgers to work, the parties involved have to agree on a common language; for smart contracts to be completely hands-free, some kind of shared database would be required.

Read Also:
10 Best Practices in Configuring your Agile Project Management Tools

[Get up to speed on distributed ledgers, cryptocurrencies and the bleeding edge of fintech at American Banker's third annual Blockchains + Digital Currencies conference July 28 in New York.

 



Chief Analytics Officer Europe

25
Apr
2017
Chief Analytics Officer Europe

15% off with code 7WDCAO17

Read Also:
The Dynamic Future of Customer Service: How Machine Learning Will (Finally) Make Business Personal

Chief Analytics Officer Spring 2017

2
May
2017
Chief Analytics Officer Spring 2017

15% off with code MP15

Read Also:
Qualitative Data: The Context that Gives Meaning to Your Big Data

Big Data and Analytics for Healthcare Philadelphia

17
May
2017
Big Data and Analytics for Healthcare Philadelphia

$200 off with code DATA200

Read Also:
How artificial intelligence will transform Wall Street

SMX London

23
May
2017
SMX London

10% off with code 7WDATASMX

Read Also:
3 Practical Ways Artificial Intelligence Can Enhance Marketing Creativity Right Now

Data Science Congress 2017

5
Jun
2017
Data Science Congress 2017

20% off with code 7wdata_DSC2017

Read Also:
The Dynamic Future of Customer Service: How Machine Learning Will (Finally) Make Business Personal
Read Also:
Introduction to Open Science: Why data versioning and data care practices are key for science and social science.

Leave a Reply

Your email address will not be published. Required fields are marked *