SmartStream launches liquidity stress test module
21 July 2020 London
Image: Natalie_Mis/Shutterstock
SmartStream Technologies has launched an intraday liquidity stress testing module as part of its transaction lifecycle management (TLM) cash and liquidity management product suite.
The module, available as either standalone or via the cloud, will reduce the time of carrying out a stress test from up to eight weeks to minutes, which will improve the efficiency of scenarios, reporting, and risk analysis.
Research was commissioned by SmartStream from management consultancy firm Baringa Partners.
The report cited that if a bank could cut its liquidity buffer by $6 billion, it could save up to $50 million per year. Therefore, there is a distinct need for banks to carry out stress tests to both improve efficiency and reduce operational effort in order to meet regulatory requirements.
Nadeem Shamim, head of cash and liquidity at 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.”
“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 of Baringa Partners, added: “The research identifies that it is 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.”
The module, available as either standalone or via the cloud, will reduce the time of carrying out a stress test from up to eight weeks to minutes, which will improve the efficiency of scenarios, reporting, and risk analysis.
Research was commissioned by SmartStream from management consultancy firm Baringa Partners.
The report cited that if a bank could cut its liquidity buffer by $6 billion, it could save up to $50 million per year. Therefore, there is a distinct need for banks to carry out stress tests to both improve efficiency and reduce operational effort in order to meet regulatory requirements.
Nadeem Shamim, head of cash and liquidity at 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.”
“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 of Baringa Partners, added: “The research identifies that it is 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.”
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