The increased scrutiny on liquidity risk since the world-wide financial crisis, and the regulated improvements to liquidity management practices are profoundly impacting the payment industry. We invite you to thoroughly examine the issues that cause the liquidity crises and what needs to be done to modernize liquidity risk management practices and reporting.
These ongoing developments are causing two tidal changes in the payments industry: charging for liquidity cost and rationalizing correspondent banking. For example, improved transparency of the costs of liquidity is beginning to lead to these costs being built into the cost of payment products. Second, the correspondent banking business is being transformed by the higher standards of liquidity risk management. The push to increase the number of direct clearers has already begun to decrease the size of the market for correspondent banking business. Finally, IT vendors are being handed a challenging opportunity to create liquidity risk management and reporting software that can provide real-time data about a bank’s liquidity position across all currencies, monitor the cost of liquidity provision, and interface directly with the systems from which it requires input and to which it must deliver output.
To learn more, access our latest research: Payments and the Art of Liquidity Management: The Liquid Core of the Payment Business.