Monitoring short-term investments is another important radar for liquidity risk and issues. Two reports to run are: • Short-term investments as a percent of total assets • Short-term investments vs. short-term non-core funding Again, comparing the bank’s ratios to those of peers provides useful context. The liquidity risk reports can identify areas of concern and help the institution prepare in the event it must liquidate any of the portfolio. Evaluating short-term investments can also identify the need to overhaul or adjust investment and liquidity policies to better pivot under more stressed economic environments. Additional Analytics for Guiding Financial Institution Decisions Additional analytics useful in the current environment include reports on investment growth, investment duration and unrealized loss positions in the investment portfolio. It is also important to consider the more granular aspects of the broader categories shown in the graphs herein. A good reporting solution allows the analyst to drill down into the underlying data and slice the data by product, individual customer, geographic location and more. All the reports above highlight areas that are especially key to monitor considering recent bank failures: capital, growth and liquidity. However, other reports beyond the scope of this article can help a financial institution and its directors assess and plan. For example, ongoing reports related to profit, asset quality and yields versus costs provide critical information for better managing the bank. Access Data for Bank Reporting As previously described, data can drive risk and growth decisions. A common challenge among banks, however, is being able to provide leaders with data that is actually meaningful. Many financial institutions store the information needed to spot trends and red flags across their core systems, spreadsheets, loan tapes and other disconnected data sources. Banks may lack the talent or infrastructure for dedicated data warehousing and data science. As a result, quickly and efficiently delivering basic snapshots focused on liquidity, capital and growth isn’t possible at these institutions, and it becomes even more complex as the bank grows. In addition, some forms of data yield little in the way of insights that can drive action. They simply add clutter to the noise of the workday. Financial institutions need help sifting through mountains of data so they can derive value and take action. A banking intelligence solution purpose-built for banks should combine analytics and intuitive dashboards to make it easier to make data-driven decisions. It should provide an improved understanding and point staff in the direction of opportunities to better manage credit risk, liquidity risk, market risk and compliance risk, including the effectiveness of the institution’s programs for preventing money laundering and fraud. For example, leveraging archived loans as well as loan pipeline data can provide an early warning system of concentration risk or a projection of future concentration risk so that management and the board can make proactive credit risk management decisions. Curated insights into sources of risk can show which customer types are contributing to additional work related to anti-money laundering/countering the financing of terrorism (AML/CFT) compliance. Visualizing the institution’s lending footprint can lead to improved targeting of growth areas. A banking intelligence system that provides dashboards that are based on roles within the financial institution paves the way for better decisions from the top down and from the bottom up. Unlike spreadsheets or complicated business intelligence tools, this kind of banking intelligence makes it easier to assess institutional performance, increase employee performance, unlock opportunities for growth and anticipate future risks. A common challenge among banks, however, is being able to provide leaders with data that is actually meaningful. 15 In Touch
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