FNA’s Phillip Straley’s five points on liquidity from his panel discussion at Currency Research’s Payments Summit
FNA’s President Phillip Straley recently joined Deutsche Bank’s Bernd Bauermeister for a panel discussion on Automated Liquidity Optimization and Payments Risk Control. The event was part of Currency Research’s flagship Payments Week conference in Paris and the session was moderated by Shaun Ferrari.
Phillip summarizes the session below:
Pressure on Bank Treasurers and Liquidity Managers Continues to Mount
Pressures continue to mount around intraday liquidity specifically, as settlement volumes grow, and settlement cycles are extended and move in the direction of real-time. This will continue and pick up pace.
Advances and Gaps in Real-Time Payments Visibility
The progress that many large global banks (GSIBs, DSIBs) have made over the last 5-6 years on real-time global visibility of payments flows has been substantial. Unfortunately, for every large bank that has made significant progress, another has lagged.
Regulatory Pressure for Greater Payments Control is Rising
The panelists see ongoing (but internationally uneven) regulatory pressure increasing for not only granular payments and liquidity position visibility but also greater control over payment flows, both in business-as-usual conditions and particularly in times of stress. This need was accentuated during the SVB and CS episodes in 2023 but market and bank-specific stress events occur fairly regularly and response needs to be supported by automation wherever possible.
Moving Beyond Throttling: The Need for True Liquidity Optimization
The session highlighted the importance of true optimization of flows (beyond rules-based throttling) to manage liquidity costs. Banks’ intraday liquidity management process is complex with bank-specific constraints (e.g., time-critical obligations, priority codes, outflow controls). These constraints need to be taken into account in a more nuanced optimization framework that ensures client and stakeholder obligations are respected while
Enhanced Liquidity Cost Attribution and Client-Specific Pricing as a Critical Capability
The need for increased ability to attribute liquidity costs below the business unit level to individual clients, while enabling the tailoring of liquidity products for clients that meet payments SLAs they’re willing to pay for, will be an important marker of competitive advantage going forward.
Thank you to Currency Research for organizing the event and Bernd Bauermeister and Shaun Ferrari for a great discussion on an important set of topics.
Learn more about how FNA is transforming Liquidity management through Intelligent Liquidity Optimization here: https://fna.fi/solution/intelligent-liquidity-optimization/
