The evolution of the FS chief data officer

The past decade has seen a significant evolution in the role of the chief data officer (CDO) within financial institutions. Initially focused on data governance and quality, the role has expanded to encompass comprehensive data strategy, advanced analytics, and the integration of both structured and unstructured data to drive business value.

As the financial sector navigates an increasingly complex data landscape, the CDO’s role is more crucial than ever, balancing innovation with stringent compliance and ethical considerations. Leathwaite has spoken with data professionals across the financial services industry to better understand the current landscape and be in a position to inform heads of talent acquisition, chief human resource officers, and heads of technology about the evolving nature of the CDO role and what to look for when hiring for this critical position.

The journey from structured to unstructured data

 

In the early stages, CDOs primarily concentrated on structured data governance. This involved creating taxonomies, establishing data ownership, and ensuring data quality and transparency for easily quantifiable information such as transactions, client data, and financial records. The focus was on implementing governance frameworks that included data ownership, stewardship, data architecture, and data quality management. This phase involved creating master and authoritative systems, ensuring data transparency through lineage and traceability, and fostering a data-driven culture where data is treated as a valuable asset.

As financial institutions have matured in their data management practices, the emphasis has shifted towards leveraging unstructured data. This type of data, which includes emails, news articles, social media posts, and customer reviews, presents unique challenges due to its complexity and volume. CDOs are now tasked with deploying advanced tools such as data lakes, artificial intelligence (AI), machine learning (ML), and natural language processing (NLP) to extract actionable insights from this unstructured data. These tools help in parsing through large datasets to derive market sentiment and other valuable insights.

However, as one sitting CDO noted, it’s less about the specific tools and more about how the CDO executes their strategy. Whether the CDO owns the change program or simply influences it plays a key role in the success of their mandate. The tools are secondary—there are always tools—but what matters is how the CDO delivers results and drives meaningful business impact.

Where the CDO sits in the organization

 

A critical factor for the success of the CDO role is where it sits within the organization. The reporting line, whether to the CIO, CFO, COO, or CEO, has a significant influence on how effective a CDO can be. Close business alignment is key, regardless of where the CDO reports, and this alignment ensures that the CDO is positioned to drive change effectively rather than being confined to policy-making that may be ignored. As one Head of Data noted,

“If the role is based too far in technology, it risks being distanced from the business; if it is only policy-driven, it can be side-lined.”

The reporting line also influences the CDO’s tribe, or their network of allies. Being part of a common management team allows the CDO to gain buy-in more easily from peers and stakeholders. As the data leader highlighted, this alignment with business objectives and the ability to influence decisions at the executive level can’t be overstated.

Accountability for delivery

 

Another key consideration is the CDO’s delivery accountability. The type of team the CDO leads and the skills and resources available to them directly impact their ability to execute. A successful CDO will have control over the people, budget, and tools necessary to implement a data strategy. As one CDO shared,

“I am driving a data product strategy and have the people, skills, and budget to do so.” While tools are important, they are secondary to having the right team and budget in place to deliver results.”

Building the future: recruiting the next-generation chief

data officer

 

The role of the chief data officer is rapidly evolving, with increasing responsibilities in data governance, analytics, and business transformation. As financial institutions continue to navigate the complexities of structured and unstructured data, the CDO will be instrumental in harnessing data’s full potential to drive innovation, compliance, and strategic growth.

For heads of talent acquisition, chief human resource officers, and heads of technology, understanding the evolving nature of the CDO role and what to look for in candidates will be crucial in hiring the right leaders to drive your organization’s data strategy forward. Ensure your recruitment strategies are aligned with the future needs of this pivotal role, emphasizing the importance of innovation, compliance, and strategic insight in your selection criteria. Additionally, assess where the CDO sits within the organization, and whether they have the necessary resources and business alignment to be truly effective.