The accelerated pace of change for bank treasury

Heading into 2020, the move to real-time reporting and analytics around liquidity, treasury and asset and liability management (ALM) was already key for bank treasurers. The ramifications of the COVID-19 pandemic have accelerated this even further.

Bank treasurers are ideally placed to help their institutions and customers in this regard. Treasury departments hold a unique place in the bank and can understand and monitor how customers’ behavior changes. In the past couple of months, that behavior is likely to have changed quite a lot in terms of how they're using cash and drawing down on borrowing facilities, for example. The impact of this is that reporting on credit exposure, funding, liquidity and collateral needs to move at a faster pace.

As with the financial crisis, the impact of COVID-19 has once again turned the focus on the treasurer. The difference this time is that, rather than the banks requiring financial support, governments around the world are now asking banks to support businesses and provide liquidity for them.

As the strategic manager of the balance sheet, the bank treasurer needs to be ever closer to the demands on liquidity and its effect on the balance sheet. There may be a need to model the change in customer behavior and to recalibrate forecasting models to account for these new trends. Stress testing based on a complete set of data relating to the pandemic will be key to ensuring a holistic view of the likely impact.

Bank treasurers also hold a unique strategic position in that they are close to three critical stakeholders: customers, the regulator and the Asset Liability Committee (ALCO). Information between these stakeholders needs to flow quickly and issues flagged and dealt with quickly.

The sheer amount of data and the velocity at which this data has to be managed and reported needs robust systems that can support today’s treasurer to manage change as the treasury world moves to a real-time norm. The current pandemic has heightened this focus. Those who equip themselves with the right tools to manage through this market volatility and economic uncertainty will be in the best position to succeed.