BofE works towards “data heaven” in seven step plan 

BofE with a union jack flag.
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The Bank of England has published a seven-step plan explaining how it is changing its data and analytics strategy as it works towards “data heaven”.

The Bank announced the plans to change its strategy during a speech by Executive Director James Benford, which was given during the Big Data and AI World, part of Tech Show London, at the ExCeL centre.

Benford began his speech by outlining just how important data and analysis is to the bank, in regards to its day-to-day operations.

He explained how it drives policy decisions and affects 2000 financial institutions that report to the bank, contributing to over 37,500 published data series, which are “core to UK and global financial statistics”.

“Data is the lifeblood of the Bank and analytics are the beating heart behind our decisions. We cannot take effective decisions to discharge our functions without detailed information and expert analysis about the economy and financial system. It has always been thus, right back to when the Bank was founded as a private bank in 1694,” Benford said.

In today’s world data represents much more than just a wind dial for banks and now appears in the form of big datasets. Benford listed four of the big datasets during his speech – trade repository reporting, household finances, companies and payments, with these four being the largest out of 40 that the BofE deals with.

Discussing the largest of the four, Benford said: “The largest big dataset arrives from trade repositories, who on a daily basis send us around 100 million rows of data on individual derivatives transactions and positions and around 15 million rows of data on securities financing transactions and positions. 

“Our financial stability area has built up a range of tools to interrogate this data set every day and to monitor and flag the build-up of risk in the system.”

Creating a data platform capable of managing and analysing large datasets, like the aforementioned, was a crucial aspect of the Bank’s last data and analytics strategy. The strategy emphasised empowerment, fostering a wider data community within the bank and providing analysts with modern analytical tools.

Following on from its successful approach last year, the bank has reviewed its plan and published a fresh seven-step approach to revitalise its strategy and continue on a path of development alongside modern technology.

The first step of the plan features an independent review, which was released in October 2023.

“It (the review) recognised both the big strides the Bank had made in recent years and the distance still to travel. There has been a nervousness in adopting new technologies, notably cloud solutions, and changing established ways of working. There was a tendency also towards siloed ways of working and localised solutions,” Benford added.

The review set out 10 detailed recommendations, under three key themes. The first called for the bank to agree to an updated vision for data and analytics. The second recommended breaking down institutional, cultural and technological barriers and the third encouraged the bank to deepen its efforts of providing staff with the necessary skills.

The second and third steps aim at defining a governance structure to shape a collective response and defining a medium term strategic goal. To achieve this, the bank has worked towards the second step by creating a new board, which reports to Court.

In regards to the third step and outlining the bank’s medium term goals, Benford said: “The big areas we are seeking to change across the organisation as a whole are grouped into four missions. Stronger data governance and management to make it easier to find, access and connect the data they need. 

“Work with UK and international organisations to share data and drive adoption of data standards and best practices. A new cloud platform to modernise how we analyse data and inform decisions. Applications of innovative technologies such as artificial intelligence that build on it.” 

Regarding this latter point, AI is an emerging technology that has caught significant interest in the banking and finance sectors of late, and the Bank of England is no exception to this – Governor Andrew Bailey has commented on the institution’s approach to AI on several occasions.

Step four, ‘agree principles and a consistent data architecture to guide approach’, and five, ‘agree immediate priorities for a data portfolio’, have also been explained. For step four the bank has agreed a set of D&A Principles to set the tone at all levels of the organisation.

Step five, was to prioritise the investment portfolio for the year ahead. Benford said: “This year we took a different approach on the investment portfolio by bringing all the experts and decision makers together at an offsite to agree prioritisation principles and effect them.”

Step six of the plan looks to seize the opportunity of change to rework end-to-end operating models.

“In our work to transform statistical production and macro-financial analysis, we are looking afresh at the business processes involved and looking to find efficiency gains and to enhance capabilities,” Benford said.

“Most ambitious here are our plans to Transform Data Collection, jointly with the Financial Conduct Authority (FCA). The aim is to build a system that provides the right data at the lowest possible cost.”

The final step of the bank’s plan is to publish, mobilise and execute its plan as well as track its performance. The bank has announced plans to publish a three-year roadmap with its annual report in June.

“That commitment is already proving a valuable device to focus attention at a senior level on agreeing the plan, including prompt for business areas to think through what they may need in the years ahead,” Benford concluded.

“We are bringing and connecting all our data together, modernising our analytical process, upskilling our workforce so all can take advantage of the very latest tools. We are taking the opportunity to look at how we connect externally and re-working our business processes. 

“Transformation won’t happen overnight, but we will keep at it and report regularly on progress and our process to share our learnings and so you can feedback and hold us to account.”