The Data Standardization Challenge

Data standardization offers significant benefits for industry and regulators alike, suggesting that it should be easy. In practice, however, the process has been difficult and slow moving. Moving from an abstract incentive-based analysis to one focused on institutional detail reveals myriad frictions favoring the status quo despite foregone gains. This paper explores the benefits of and challenges confronting standardization, why it should be a top regulatory priority, and how to overcome some of the obstacles to implementation. The paper also uses data standardization as a lens into the challenges that impede optimal financial regulation. Alongside capture and other common explanations for regulatory failures, this paper suggests that coordination problems, delayed benefits, and other banal, but perhaps no less intractable, challenges are often the real impediments to better financial regulation.