Overview

Managing liquidity and its associated risk is a ‘hot topic' in the industry and many financial institutions are investing to improve their ability to face potential future crises and comply with or prepare for new regulations.

Implementing liquidity risk strategy and all its required changes poses an important operational and data management challenge. Organisations need to collect, monitor and report a range of data at multiple levels of aggregation. However critical data management issues continue to impede progress on liquidity risk management strategies.

The liquidity information you need, when you need it

The business case to invest in real-time liquidity management goes beyond regulatory compliance and risk mitigation. Getting it right can save banks a lot of money, too.

Lack of intraday data can lead to a late identification of gaps between forecasted and real inflows, outflows and positions, resulting in substantial financial costs - due to over-collateralisation, intraday credit line costs, higher funding costs, overdraft charges and higher liquidity buffers.

SWIFT services and standards can help you build liquidity dashboards and develop liquidity risk analytics in an efficient way to deliver real savings.

• Obtain a view on your intra-day liquidity position by receiving SWIFT intra-day cash and collateral reports more frequently across accounts and currencies
• Build a firm-wide view on your liquidity position, by using SWIFT's FINInform copy service to monitor cash movements and liquidity positions of branches
• Improve predictive collateral position management, by using SWIFT's new margin call standards
• Get better liquidity and liquidity risk insights through the SWIFT Watch Value Analyser
• Assess your liquidity related operational processes and support integration projects, by using SWIFT's Consulting Services

SWIFT - driving progress in liquidity management

SWIFT is working closely with the industry to identify and address liquidity management challenges. Part of its approach is to talk with industry experts about the key targets - and barriers - to effective liquidity management. A SWIFT survey and white paper in 2010 concluded effective liquidity risk management requires a top-down and bottom-up approach. Strategy, principles and objectives must be set at management and board level, while the liquidity dashboard and analytics must be obtained at the operational level.

However, a follow-up survey of 40 industry experts has concluded that data management challenges continue to delay progress in addressing liquidity risk issues. A new SWIFT white paper published in August 2011 summarises the barriers to progress - and outlines collaborative approaches to addressing these challenges. SWIFT's liquidity risk services are designed to help you address these issues in an effective, structural way.