Modernising intra-day liquidity optimisation for commercial banks

Jeremie Feuillette, Will Towning and Kimmo Soramäki
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Jeremie Feuillette: FNA, UK
Will Towning: FNA, UK
Kimmo Soramäki: FNA, UK

Journal of Digital Banking, 2023, vol. 8, issue 1, 58-64

Abstract: Commercial banks are facing a period of exceptionally difficult funding conditions amidst a challenging economic environment. To address this, banks need to optimise their liquidity flows and usage. But existing liquidity optimisation and management methods fall short of materially reducing liquidity costs and can generate large operational risks. This paper describes how advanced analytics and algorithms can be used to optimise liquidity flows and usage in a real-time environment through payment resequencing. This approach can enable banks to significantly and consistently reduce liquidity usage and costs, potentially turning more effective treasuries into profit centres. This paper also describes the fundamental requirements for embarking on a modern liquidity optimisation project and also presents some recommendations for best practices in operational and technological infrastructure.

Keywords: liquidity; optimisation; resequencing; networks; algorithms; simulation (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jdb000:y:2023:v:8:i:1:p:58-64

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