Most banks cannot forecast regulatory metrics in intra-day - Mors Software

Source: MORS Software

Mors Software today published the results of its 5th Annual Liquidity Risk Management Survey carried out between May and July 2015.

The survey results show the regulatory reporting pressure as the main driver for developing intra-day liquidity risk management in banks, and at the same time shows that development projects are still underway.

Key findings of the survey:

  • Regulatory compliance and internal steering share top position as the most important drivers for completing implementation of intra-day liquidity risk monitoring
  • The pressure to develop stress testing capabilities is both internal and external
  • The majority of banks are not able to forecast regulatory or rating agency metrics in intra-day
  • Development of intra-day liquidity risk monitoring is still underway, with only a small minority of banks having completed their projects

The 2015 survey, the 5th annual survey, reveals interesting trends in motives and drives for the development of intra-day liquidity risk management by banks. Firstly, intra-day liquidity risk management has no doubt remained an important priority development area for banks. Secondly, the motivation for development has changed from survival and cost savings after the financial crisis to reporting pressure from numerous stakeholders. Increasing numbers of both requirements and demands from stakeholders reveal the complexity of the issue. The survey results also demonstrate that development projects invariably appear to be time-consuming and that development still appears to be far from complete.

The MORS Software 2015 Liquidity Risk Management Survey was conducted between 20 May and 10 July, 2015. Eighty-nine banking professionals participated from the UK, Continental Europe, Asia, Africa, the Middle-East and North America. A total of thirty-one countries were represented.

“The 2015 survey findings correspond with the trends revealed by our earlier studies,” said Mika Mustakallio, MORS Software CEO. “Developing intra-day liquidity risk monitoring and managing capabilities are seen as prioritised projects in banks. The upcoming significance of internal steering and forecasting are arising from the banks’ internal reporting metrics. Similar capabilities to control external metrics up-front, by monitoring, stress testing and forecasting them, are not so widely developed, yet.”

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