Navigating cash and treasury: 4. Establish intraday liquidity monitoring capabilities

Are you able to monitor all intraday activity for true cash visibility?

Today, financial services organizations are more focused on what’s necessary to safeguard business continuity and solvency. Much of this begins with greater visibility and reliability of key data to help drive your critical business decisions, especially during critical market changes.

Our current blog series is reviewing cash and treasury best practices you can follow to prepare for instant payments and build true cash visibility. In the previous post, we reviewed best practices for enhancing cash and liquidity forecasting. This week, we focus on ways to establish intraday liquidity monitoring capabilities.

Consideration #4: Establish intraday liquidity monitoring capabilities

Banks and financial services organizations bound by intraday liquidity regulations have an opportunity to build a stronger competitive position.

According to consulting firm Oliver Wyman: “Analysis indicates that a 25–50% reduction in intraday liquidity costs is well within reach. Further, banks will also stand to benefit from optimal efficiency, improved risk management, and timely decision-making around this scarce resource.” There are numerous financial and non-financial benefits, as well as new technological tools that simplify these complex treasury functions.

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Cash and treasury: Prepare for instant payments and build true cash visibility

For true cash visibility, financial services organizations need to be able to monitor all intraday activity. Analytical tools for liquidity management and real-time intraday control also provide guidance for maintaining compliance with emerging regulatory requirements.

Best practices to follow

• Improving intraday liquidity management—An Intraday liquidity management tool offers comprehensive visibility into an organization’s settlement activity across all of its direct and indirect accounts. Analyzing balances, turnover, and transactions throughout the day provides real-time intraday insights, such as external intraday advice, EOD statements, and alerting monitors.
  
  
• Optimizing cash, collateral, and liquidity in real time—Securing intraday control is critical to running an efficient and compliant financial services organization. True intraday control is achieved when an organization can monitor its actual account activity, compare this against expected activity, and manage any discrepancies and risks that arise—in real time, every minute of every day. By addressing this, an organization can capture, control, and optimize its intraday cash, collateral, and liquidity positions in real time.
  
  
• Ensuring that the infrastructure is up to the task—Successful intraday control requires tools that are designed and architected to continually process very high data volumes and provide instant visibility.
  
  
• Complying with regulatory reporting—It’s not enough to ensure that an organization’s reporting tools are compliant with global regulatory monitoring and reporting guidelines for intraday activity. Financial services organizations should regularly refresh their reporting tools to keep pace with evolving regulatory demands across the globe. These demands can come from BCBS248, the UK PRA intraday regime, the US Federal Reserve Board, or new requirements released by any number of regulators. As financial services organizations continue to come under greater scrutiny, they should develop regulatory reporting tools, process, and methods proactively.

Next week, our blog series with look at how to modernize the core of financial management.

If you would like to discover more about intraday liquidity and other related topics, we invite you to download this eBook on how to prepare for instant payments and build true cash visibility.