Data Economics

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YDC Data Monetization Index for Bank Compliance with LFI Rating System

December 13, 2021

Summary

The Large Financial Institution (LFI) rating system is a key component of the compliance regimen for the largest banks in the United States. In the absence of a satisfactory LFI rating from the United States Federal Reserve, banks cannot buy back stock, pay dividends or make acquisitions. 

Most publicly-traded banks in the United States have an LFI-driven YDC Data Monetization Index (DMI) of 1.8 percent. However, the absolute value of the LFI dataset varies from $303 billion for Ally Financial to $8.8 trillion for JP Morgan Chase.

Definitions

  • YDC Data Monetization Index (DMI) = Data Valuation / Market Capitalization
  • Data Valuation = LFI Data Valuation + Customer Data Valuation + Employee Data Valuation + Other Asset Valuation (this exercise uses LFI Data Valuation exclusively)
  • The LFI dataset includes all information used for compliance with the LFI program including Key Data Elements and Risk Data Aggregation & Risk Reporting (RDARR) certification

Methodology

The YDC team recently published a YDC DMI for the largest publicly-traded banks in the United States in terms of net assets. Here is an example for PNC Financial along with a benchmark for other banks.

The data valuation is based on LFI data only and relies exclusively on publicly available data sources. The total value of data will likely be higher once additional datasets such as for customers, financials and employees are included in the coverage.

The LFI data valuation methodology uses proxies for the impact on a company’s stock price based on signals from the Federal Reserve relating to actions such as stock buybacks.

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