In a recent article on Risk.net, Pierre Gaudin, Head of Business Development at ActiveViam, delves into the critical role of fast, in-memory data analysis functions in transforming liquidity management within financial institutions. The article shows how these functions give decision-makers useful information quickly, which is important in today’s changing financial world.
The Changing Landscape of Liquidity Management
The global financial crisis of 2008 emphasized the importance of liquidity risk. In response, regulators introduced liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) requirements with a 30-day time horizon. Regulators designed these measures to intervene and reassure depositors during liquidity crises.
Recent events, especially affecting regional banks in the United States, have brought to light the speed at which depositors can withdraw funds, often fueled by social networks. This change has increased the importance for banks to concentrate on rebuilding trust and managing reputational risk. It is crucial for them to incorporate these aspects into their business and risk management strategies.
The Shift Towards Operational Intelligence Platforms
Traditional ALM and liquidity forecasts provide useful information but generate too much data, making reporting tools inefficient. To address this, many institutions are turning to operational intelligence platforms. These tools provide quick information on various aspects required by teams and departments. They assist with stress tests and evaluating the immediate impacts of different factors.
Operational intelligence platforms help teams collaborate on risk and performance indicators, preventing issues and finding opportunities. They achieve this by displaying current treasury data side by side with the latest forecasts, allowing for quick reactions to changing circumstances.
Key Benefits of Operational Intelligence Platforms
- Monitoring and analyzing limit breaches and outlying positions
- Empowering teams with instant analytics
- Identifying risks and opportunities.
Overcoming Data Challenges
One significant challenge in implementing operational intelligence platforms is managing the vast datasets required for analysis. These platforms efficiently handle both current and historical data, providing a single source of truth accessible in real-time. Technologies like Atoti offer fast, in-memory data analysis functions, acting as a universal semantic layer between data and different user teams.
The Power of Real-Time Insights
In conclusion, operational intelligence platforms act as a communication hub between teams, consolidating a single source of truth. With real-time insights, business, treasury, risk, and finance teams can report and manage risks as they emerge, anticipate and navigate stressed situations, and identify business opportunities.
To read the full article by Pierre Gaudin, head of business development at ActiveViam, and delve deeper into the revolution of liquidity management through operational intelligence, visit the original article on Risk.net.