February 28, 2012 - FinArch, international market leader in integrated risk and finance solutions for the financial services industry, announced that Basel III has been added to its Finance, Risk and Performance Measurement Platform Financial Studio. Financial Studio Basel III is a unique, comprehensive and flexible end-to-end solution that meets all Basel III regulatory requirements, and, at the same time, banks’ strategic business needs.
Basel III will have Major Impact on Business Performance
The Basel III Framework has been designed to enable banks and financial institutions to better manage risk in a response to the deficiencies exposed by the financial crisis. Fundamentally, the Basel III rules are designed to strengthen the resilience of the global financial system. Basel III establishes tougher capital standards while higher risk-weighted assets are required for counterparty credit risk, via credit value adjustment charges, and for market and securitization risk. It introduces new liquidity standards through requirements for liquidity ratios and various other monitoring liquidity risk metrics. Ratios include the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR). On top, the new rules impose more stress testing and reporting requirements.
Inevitably, the Basel III rules will fundamentally impact banks’ profitability and business models. Financial institutions will need a solution that allows them to deal with the new requirements, but more so a tool that takes a best practice approach to managing risk and capital of which regulatory compliance is only a part.
FinArch’s Basel III Solution to Boost Profitability
FinArch’s Basel III Solution, built from a business perspective, accommodates strategic sustainability and, at the same time, ensures compliance with the new regulatory requirements. The FinArch Basel III Solution:
- Supports the measurement of all Basel III requirements and has the flexibility to cope with changes that may become part of the Basel III regulations in the future.
- Comes complete with a data management capability that collects and manages all risk data in a consistent manner which can then be leveraged to inform other essential business decisions
- Optimizes capital and liquidity buffers through adequate capital planning and liquidity stress testing analysis
- Incorporates the capital and liquidity cost into pricing decisions in order to manage capital and liquidity against performance objectives.
Implementing FinArch’s Basel III Solution is clearly not a purely compliance exercise. It gives a competitive advantage now and in the event of future crises, through the following capabilities.
The modularity of Financial Studio Basel III allows banks that already have some elements of Basel III functionality in place to add Financial Studio Basel III components such as the capital calculator, the credit value adjustment engine or the liquidity risk calculators. Financial Studio Basel III is also a scalable solution which can be integrated seamlessly with other Financial Studio solutions for ALM, Economic Capital, Accounting, Dodd Frank, IFRS, IFRS9, and Product Control. It manages liquidity, capital and other finance functionalities based on the same 'single version of the truth' from a data and functionality perspective, therefore delivering greater risk management transparency and reporting capability.
“Banks are facing a flood of regulations they need to comply with, starting with liquidity risk requirements. The complexity of the standards and the amount of the required capital buffer, causes the entire banking world major concerns. In addition, the calculations and the reporting of the requirements impose strong technological issues to the banks.” Says Nigel Lee, Chief Commercial Officer at FinArch. “Banks that start implementing today an integrated risk and finance platform have a competitive advantage: they will overcome the upcoming challenges swiftly, with a higher return on investment, better insight into the risks, and maximisation of profit. So the earlier banks start preparing, the cheaper their liquidity buffer will be.” Lee concludes.
“A constant innovator, FinArch occupies a unique position with its Basel III solution: our clients are very much impressed with our comprehensive, flexible end to end solution which helps them meet these new regulations. Moreover, customers who have already subscribed to our “FRP” platform are ahead of the game, they can leverage all previous investment in new technology to meet new regulatory requirements. This clearly illustrates the strength and added value of our offering and expertise.” Says Nancy Masschelein, Head of Product Strategy at FinArch. “In current volatile market conditions and the continued search for profitability it is important for firms to opt for risk management solutions and analytics which boost profitability and which can serve as competitive differentiator.” Masschelein concludes.