How can you manage conflicts of interest with data vendors and partners?

1 Identify potential conflicts

Identifying conflicts of interest is the first step in managing them. You should be aware of the various types of conflicts that can arise from data vendor and partner relationships, such as data quality and accuracy, data ownership and usage, data privacy and security, and data ethics and compliance. Data vendors and partners may have incentives to provide inaccurate or outdated data to the bank in order to save costs or increase revenues. They may also claim exclusive rights over the data they provide or generate, limiting the bank's ability to use it. Additionally, they may have access to sensitive or confidential data from the bank or its customers, exposing them to potential breaches or misuse of the data. Finally, they may have different standards or practices regarding the ethical and legal aspects of data collection, processing, and analysis, creating conflicts with the bank's values, policies, or regulations.

2 Assess the impact and severity

The second step to manage conflicts of interest is to assess their impact and severity. You need to evaluate how the conflicts affect the bank's objectives, performance, reputation, and risks, as well as the interests of its customers and regulators. You can use a risk matrix to rank the conflicts according to their likelihood and consequence, and prioritize the ones that require immediate attention or mitigation. For example, a conflict that has a high probability of causing significant financial, legal, or reputational damage to the bank should be addressed as soon as possible.

3 Implement mitigation strategies

The third step to manage conflicts of interest is to implement mitigation strategies. You need to design and apply measures that can reduce, eliminate, or manage the conflicts in a fair and transparent manner. To do this, contractual agreements should be negotiated and established with data vendors and partners, covering topics such as data quality, ownership, usage, privacy, security, ethics, and compliance. Additionally, disclosure and consent should be obtained from customers and regulators about data vendor relationships and how their data is collected, processed, and analyzed. Furthermore, monitoring and auditing of performance and behavior should be conducted to verify that vendors comply with contractual agreements and the bank's standards. Finally, any issues or disputes that arise should be escalated and resolved with corrective actions or sanctions if necessary.

5 Benefits of managing conflicts

The fifth step to manage conflicts of interest is to recognize and communicate the benefits of doing so. You should not view managing conflicts as a burden or a constraint, but rather as an opportunity and a responsibility. Doing so can enhance the quality and value of your data, improving your decision-making and performance. It also allows you to protect the rights and interests of your customers and regulators, helping to build trust and loyalty with them. Additionally, managing conflicts of interest can strengthen your reputation and credibility as a responsible and ethical data user and provider, while reducing your exposure and vulnerability to potential risks and liabilities.

6 Tips and best practices

The sixth and final step to manage conflicts of interest is to follow some tips and best practices. Proactivity and prevention are key; don't wait for conflicts to arise, but conduct due diligence and risk assessments before engaging with data vendors and partners. Transparency and accountability should be prioritized; don't hide or ignore conflicts, but disclose and report them to stakeholders, and take ownership and action to address them. Lastly, view conflicts not as a zero-sum game, but as an opportunity to collaborate and create value with your data vendors and partners, while also learning from each other.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?