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Big data is good, but for liquidity risk and regulatory reporting in the age of Covid-19, small data is better

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PrintAs financial institutions navigate Covid-19’s devastating economic impacts, managing liquidity risk and regulatory reporting and maintaining regulatory compliance is more challenging than ever.

Under Basel standards, to meet liquidity risk and regulatory reporting requirements, banks must calculate their daily liquidity coverage ratio (LCR). And a major change now facing banks is around the new liquidity stress testing (LST) requirements. Behind the new liquidity risk and regulatory reporting requirements is a big data ask: more data, reported more frequently.

To comply, financial institutions may have to adopt new models, create new scenarios, and run them concurrently. Regions may implement the Basel-drivers differently, but the challenges financial institutions face on the liquidity front and from the big data requirement are similar.

Thus, organisations seek new technologies that can help them track, trace, and manage their liquidity risk and regulatory reporting data and better understand the crisis’ impact on the balance sheet and financial liquidity.

As they manage to a panoply of Covid-19 disruptions and changing regulatory requirements, financial institutions in all jurisdictions must be able to evaluate regulatory data management and reporting technology from both ‘big’ and ‘small’ data perspectives. And whatever technologies they deploy must not only be fast and nimble, but also transparent and auditable.

Even more urgent, however, is that banks need to be able to track, trace, and extract data at an extremely granular level to better manage their balance sheets and the evolving liquidity landscape. Without transparent access to the ‘small’ data and being able to understand it well, enhanced speed delivered by big data technologies is redundant. Therefore, managing underlying risk and regulatory data at that ‘small’ level is of paramount importance. Eliminating the need for manual adjustments is just as critical as achieving desired performance acceleration.

Using the right technologies to track, trace, and manage liquidity data and reporting will help financial institutions smoothly navigate the balance sheet and financial liquidity issues arising from the pandemic.

AxiomSL enables financial institutions to turn the tide of the liquidity pandemic by delivering data automation, transparency, and auditability that will satisfy regulators and provide accurate insights that a financial institution requires to manage its liquidity risk and regulatory reporting.

To learn how small data is better for liquidity risk and regulatory reporting, read the full article here.

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