Azerbaijan's financial sector lacks a single reliable data source, official says

The financial sector faces a lack of a single, reliable source of data, said Elmir Hasanli, director of the Central Bank of Azerbaijan's Data Department.

Report informs that he was speaking at the 12th Investment and Sustainable Development in Microfinance Conference, organized by the Azerbaijan Microfinance Association (AMFA) in Baku.

He said access to data has improved compared with three to five years ago.

"Nonbank credit institutions and banks can now use more data when making decisions. This includes both traditional and alternative data. Examples of alternative data include turnover, point-of-sale transaction volumes and various types of information obtained from government sources," he said.

Hasanli noted that decision-making increasingly relies on more accurate information, but institutions do not always use that data properly.

"An institution may acquire the most advanced solution, but if the data fed into it is incomplete or inaccurate, it will never produce sound decisions. I therefore believe there are two key issues here, one of which is data," he said.

According to Hasanli, many institutions embark on digital transformation only to realize shortly afterward that data transformation must come first.

"They discover that they either have no data at all or that their data is incomplete, scattered across different locations and uses different definitions for the same concepts. You ask departments for a particular figure, and one says five while another says three. In other words, there is no single, reliable source of truth," he said.

Hasanli said institutions should therefore begin with data transformation.

"This is one of the main obstacles. As the regulator, we also assess the sector using the data we receive from it. The more complete and comprehensive that data is, the more we can devote our resources to decisions that support the sector's further development rather than to verifying information," he said.