SmartStream Technologies has launched its Intraday Liquidity Stress Testing module, part of the TLM Cash and Liquidity Management suite of products. The product is available as standalone or via the cloud.
The financial Transaction Lifecycle Management solutions provider has introduced the new module so that banks can run stress tests in minutes instead of up to eight weeks, which is the norm. Stress tests are essential for refining the scenario, making real-time decisions, reporting, and risk analysis.
According to Baringa Partners, a management consultancy firm commissioned by SmartStream, if a bank could cut its liquidity buffe by $6bn, it may save as much as $50m per year. Stress testing can improve profitability and reduce operational effort to meet the regulatory requirements.
Nadeem Shamim, Head of Cash and Liquidity, SmartStream, commented: “The research carried out by Baringa Partners in conjunction with the development of our new module has created a great deal of interest in the market, we are currently having many detailed conversations with banks where the ability of a comprehensive solution with the flexibility of testing different stress scenarios is critical. Also the current turmoil in the market has had a big impact on a bank’s liquidity – so the ability to model the potential impact of such occurrences is no longer simply a regulatory box-ticking exercise, but a matter of self-protection and even of survival for many financial institutions”.
Simon Gray, Director, Baringa Partners, said: “The research identifies that it’s no longer about meeting intraday liquidity reporting requirements, banks are now seeing value in stress testing and having the tools to carry out complex scenarios with a high degree of accuracy for making more informed decisions. In addition, the findings revealed that it has gone from being a regulatory burden to creating a stringent, active framework within which to manage liquidity risk. By simplifying the complex and time-consuming testing process, SmartStream’s solution allows banks to run a variety of stress scenarios in a short space of time, which is critical”.
SmartStream has recently added Victoria Harverson as Business Development Director in the APAC region as the firm aims at strengthening its presence in Southeast Asia and Hong Kong market regions.
Last year, SmartStream released a white paper about the regulatory pressures imposed on intraday liquidity requirements, which explores the benefits that can be realized by financial institutions when they transform intraday discussions from an operational burden into adding true business value. The paper also analyzed how institutions can leverage next-generation technologies like Cloud, Artificial Intelligence and Machine Learning to achieve the goals of real-time, active management of global intraday liquidity. The report found that while meeting regulatory obligations is undoubtedly front and center for most financial institutions, the ability to manage liquidity intraday and to stress test liquidity demands are not simply a matter of regulatory interest. Smartstream concluded that business optimization opportunities can come from having a strengthened intraday liquidity framework.