Are you sometimes standing in front of your refrigerator on a Saturday night, hoping food magically appeared since you last checked 10 minutes ago?
That's what I imagine some bank treasury managers feel about their liquidity challenges.
The purpose of this post is to share some interesting insights about bank liquidity management by comparing it to something we all deal with daily: managing our refrigerator inventory.
So let me show you how your refrigerator management skills might actually make you a better banker than you think!
The Refrigerator-Bank Connection
Looking inside my own refrigerator, I can see some parallels with bank liquidity management:
- I keep essential items (milk, eggs, butter) always in stock = Banks need high-quality liquid assets (HQLA)
- I maintain emergency frozen pizzas (don't judge) = Banks need emergency funding plans
- I regularly check expiration dates = Banks monitor maturity profiles
- I plan for both regular meals and unexpected guests = Banks forecast both expected and stress scenarios
- I keep some cash ready for grocery shopping = Banks maintain market access
...however,
Last week, I completely failed at refrigerator management (ordered takeout three times), which reminded me of an institution I once worked with. Here's how our stories are a bit similar:
My Failed Refrigerator Strategy:
- Forgot to check expiration dates
- Relied on a single grocery store nearby
- No meal planning
- Emergency cash spent on impulse purchases
That Bank's Failed Liquidity Strategy:
- Irregular maturity monitoring
- Single funding source dependency
- No clear funding strategy
- Buffers used for opportunistic trading
The difference?
My failure ended with an expensive takeout bill. Their failure involved some very uncomfortable board meetings.
How SAS Asset and Liability Management on Viya Makes Life Easier for Banks
While I'm still waiting for a smart refrigerator that automatically orders and deliveries my groceries, banks already have access to sophisticated tools like SAS Asset and Liability Management on SAS Viya already today:
- Real-Time Monitoring Tracks your liquidity position continuously
- Alerts you before issues become critical
- Provides detailed dashboards and reports
- Forecasts future liquidity needs
- Identifies potential stress points
- Combines liquidity risk with interest rate risk analysis
And soon, with our integrated balance sheet management solution, you'll be able to:
- Manage your entire balance sheet in one place
- Optimize across multiple risk dimensions
- Automate regulatory reporting
- Implement dynamic strategies
- Make data-driven decisions in real-time
Conclusion
Just as refrigerators have evolved from basic igloos to smart appliances, banks must upgrade their liquidity management solution and keep up with the world they are functioning in.
SAS ALM on SAS Viya provides the sophisticated tools needed for this evolution, from advanced analytics to integrated balance sheet management.
The question is: Is your bank ready to move beyond manual processes and complicated spreadsheets?
With today's market complexities and regulatory demands, having the right tools in place isn't just an advantage, it is a necessity.
To learn how SAS Asset and Liability Management on SAS Viya can transform your bank's liquidity management, explore our technical documentation or request a demo today.
Find more articles from SAS Global Enablement and Learning here.
