Managing liquidity brings solid results for banks
April 5, 2019
April 5, 2019
Financial firms need an ability to meet payment and settlement commitments—not just at the end of every day, but at any point throughout each day. That ability, known as Intraday Liquidity Management (ILM), has been a priority since 2008’s financial crisis.
But achieving intraday liquidity is not an easy feat, as we describe in our paper, Improve performance and competitiveness through Intraday Liquidity Management. Failing to meet obligations exposes a firm to liquidity risk.
A preferred way for firms to effectively navigate intraday liquidity is via timely sourcing of relevant trade economics data, cash flow information and exact time stamps for given cash flows. Capturing real-time data is essential. But we’re not talking about just any data. Banks need an ability to leverage appropriate data that is connected and traceable across all systems.
If they can establish this capability, banks should see better decision making, improved operational capabilities and more tangible, data-driven results.
Continuous monitoring of net cumulative cash flow position throughout the day.
Early commencement of analytics activities for intraday cash positions using real-time data.
Accurate intraday forecasting using real-time intraday data points instead of the previous day’s closing position.
Banks can work toward building a robust ILM but they should understand their starting point first. The ILM process can be viewed in terms of three broad steps:
Good data is essential to a strong ILM but may not necessarily come easily. Banks should capture structured and unstructured data from multiple sources across businesses and regions. This already far-flung challenge is compounded for financial firms that are spread across a variety of regions, each subject to different compliance requirements.
Many banks are likely to encounter some data choke points:
Technology can solve some of these data challenges. Big data, machine learning and rtificial intelligence capabilities can help capture and gather meaning from appropriate data accessed across the organization, and streaming technologies can feed that new-found meaning into real-time dashboards.
Building a robust ILM model may not come easily for many financial firms, but banks that can access and use wide-ranging data in real time should see tangible benefits. See how Accenture’s ILM specialists can help.
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