SmartStream
According to Dehaan, banks are always looking to review how liquidity is managed. It is an issue that never drops off the agenda. Nevertheless, discussions of how to achieve greater efficiency do not always lead to a review of technology or the initiation of a new IT project. That may need to change. It is becoming increasingly apparent that errors in cash and liquidity management now cost more, especially given the continued rise in interest rates. Furthermore, banks that are making money in this environment have more cash to spend on investments in solutions that can increase that revenue stream. “The focus got distracted by the war in Ukraine and, before that, Covid-19,” Dehaan believes. “The war highlighted the need for stress testing. After all, when sanctions were imposed on Russia a whole asset class was frozen overnight and that had an impact on high-quality liquid assets (HQLAs).” “Now, a lot of roads lead to reducing manual intervention in cash and liquidity management, as well as the need for real-time information,” he says. “Our systems are invaluable to treasurers for modelling different scenarios for regulatory reporting, so there is a lot of good that we can bring to the table. We are always there to complement and partner with banks, rather than telling banks to get rid of all of their old systems. There is the option to take only the functionality from us that can make a real difference.”
SmartStream can help banks by delivering real- time data, streamlining regulatory engagement, reducing manual processes and much more. Clients may not need everything SmartStream has to offer, but can take whatever makes the most difference. Like most of the company’s products, its cash and liquidity management solutions are designed to be flexible according to client needs, rather than being sold as a monolithic system.
“The question banks need to ask is whether they buy, build or bolster,” says Dehaan. “Do they bolster a solution that already doesn’t work well enough? Do they build something themselves? This could be possible if the bank is big enough but even then it might not be the best option. Or do they buy from a trusted organisation that has been around for a long time and has worked with the world’s biggest banks?”
No time to hold back Even big banks with the money, time and expertise to build a solution in-house can fall short of the efficiency needed to maximise the potential of cash and liquidity management. There are instances where major international banks have so many feeds coming in at any one time that they can only get a 60%-accurate estimation of their position. What’s
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Peter Dehaan, global head, business development for cash and liquidity management at SmartStream.
more, efficiency is not the only incentive for investing in a new solution.
“It is said that regulators are now looking for control and governance for monthly reports to be of the same standard as annual reports, and that they be auditable enough to tick all of the same boxes,” Dehaan says. “So, banks are trying to be more proactive in terms of what regulators want. They have seen some big fines levied and they want to do the right thing sooner rather than later.”
“There is even an ESG angle,” he continues. “In the deployment phase, moving from on-premises to cloud- based solutions. The spin up to the cloud means you are no longer in the position of using just 20–25% of some servers, so you eliminate that waste of energy.” SmartStream’s solution addresses a fundamental issue for banks. Cash and liquidity management is all about intraday matching and the world is moving steadily towards real-time matching, which will help treasurers to react appropriately to their positions at the end of the day.
“There is a lot of trust in the market for SmartStream, which has been around for a long time,” Dehaan explains. “The user interface was designed by part of the team that won a Red Dot Design Award this year.” “We can always make things faster and more efficient,” he adds. “It is all about how quickly you can get data from a source system into your system without any breaks, and we connect all the pipes. The ability to have true real-time information reduces a lot of strain. The more data we can get, the happier we are. Consuming data doesn’t scare us.”
Dehaan knows well the pressures of investing in cash and liquidity management systems, and the barriers that prevent banks from pressing the Go button on a new project. But he firmly believes that with interest rates on the up – now is the time to act. ●
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