Liquidity Management: Balancing Regulation with Business
Abstract
Banks are struggling to manage liquidity while meeting regulatory demands.
Liquidity is critical to all banks, and there are new constraints. Regulations will have significant implications on how banks conduct their activities on a global scale. In the report, Liquidity Management: Balancing Regulation with Business, Celent provides an overview of the salient rules, examines their business and technology impacts, and provides a framework for planning IT expenditures. It is intended as an overview of the issue and is not meant to provide detailed technical advice to compliance professionals.
Liquidity management is a top priority for banks, and will be even more important in coming years:
- Regulators have focused on liquidity for key levers in managing systematic risks.
- Banks will need to develop strategies to maximize profitability.
If banks are going to spend X dollars on compliance, they should spend X+1 to get to a good business result through enhanced product offerings. Celent believes large banks will focus on developing comprehensive liquidity management solutions for their clients to offset the required investment.
“Celent anticipates that banks will take the opportunity to develop more robust and comprehensive liquidity management solutions for corporate clients,” says Robert Mancini, Senior Analyst with Celent’s Banking Group and author of the report. “This will provide banks with an opportunity to increase revenue and boost their value proposition.”
This report focuses on the high-level regulatory challenges and trends for banks in liquidity management. The first section provides an overview of the regulatory drivers, with a focus on Basel III and Dodd-Frank. The adoption of these regulatory requirements is a necessary component for banks to remain compliant with governments in all major global markets. The report then reviews the challenges facing banks and implications for their bottom line. Finally, it examines opportunities for banks.
This 28-page report contains five figures and five tables.