Very few banks have mastered the art of accountability when it comes to liquidity management. Corporate treasury and finance generally are responsible for the function in most institutions, depending on the purpose for which liquidity is being managed, but often neither one has it firmly in its domain.

Moreover, problems can arise when treasury does not charge lines of business for the use of liquidity — and often it does not. If business units are not paying for the use of daylight liquidity, they have no incentive to take ownership of the processes around it.

This lack of accountability may help explain the little focus on solving challenges to payments liquidity — challenges that can lead both to inefficiencies that add unnecessary costs and cause delays in workflow and to borrowing charges in the intraday market due to accidental overextensions around operations funding. There are also challenges to settlement that can leave banks exposed to counterparty failure, as well as challenges in providing information corporate customers need about their liquidity positions.

Global competitive advantage is at stake. Think about this: In a world where real-time information drives everything from stock trades to Web advertising decisions — and soon enough, even energy use — many banks' payments liquidity decisions are based on what was happening at the close of business the day before, or what happened this time last week, last month or even last year.

Banks need to move from making macro-level payment decisions through manual integration of data from disparate sources to a real-time understanding of their own and their customers' positions. This includes improving the measurement and management of liquidity needs on a global scale for foreign currency payments, for retail credit systems such as ACH electronic funds transfers and for meeting the demands of corporate customers who want real-time data from banks in order to manage their own liquidity.

Real-time information requires real agility. Back when liquidity was easily accessible, it may have been a pain to rely on Excel to establish one's own or a customer's most recent (not real-time) liquidity position, but the high costs and risks of doing business this way were not as evident as they are when market turmoil means liquidity is harder to come by.

Equally crucial is being able to automatically and proactively act on that particular number, for instance, by stopping a payment from being processed when it would affect mandated reserve buffers. This keeps a bank from getting too far short. Similarly, with better information and modern processes to better control liquidity, banks can avoid the damage of settling transactions with financial institutions that are on the verge of failing.

Today, payments data and transactions live on their own islands, separated according to discrete payment businesses or at least discrete geographic units. Banks might pursue integrating some of these systems in an equally siloed fashion, through extensive and expensive systems integration projects, but these approaches are not repeatable, adjustable or easily refinable. Real-time insight cannot be delivered on demand across a diverse spectrum of activities, and real-time actions and responses cannot be automated with any ease or consistency.

Banks can realize savings and reap value by building cohesive infrastructures that bring together all this data in real time, allowing them to coordinate responses to issues such as potential shortfalls and streamline payments liquidity workflows — indeed, any transaction that requires liquidity. Banks that make this investment can drive down individual transaction and ultimately total ownership costs.

Good things will flow from there: For instance, if a bank can reduce the cost of processing transactions with readily accessible, real-time data, it can price those transactions more competitively to the market.

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