Protecting and growing reserves are critical to support central banks’ expanding mandates as well as fundamentally safeguard their independence. But another round of turbulence is compelling a rethink of reserve management systems.
How can you balance the need for capital preservation and reserve growth, all while maintaining reasonable risk levels?
Technology is an important lever. Legacy IT that is impossible to upgrade, siloed systems, data breaks and unresponsive vendors have created inefficient workflows and processes. Increasing investment complexity and difficult market conditions exacerbate these challenges. How can you begin modernizing end-to-end processes, reduce system complexity and operational risks?
1. Act decisively to support monetary operations and reserve management
2. Empower teams with risk, return, liquidity analytics at their fingertips
3. Partner with technology provider with an in-depth understanding of central banks’ challenges including security and jurisdictional concerns
Author: Alan Copping, GTM Senior Strategy Principal, SimCorp
SimCorp has a global community of central bank clients that have undertaken technology transformation journeys built on a foundation of data. Our tech backbone has given reserve managers the ability to build a holistic operating model with seamless integration of all critical functions from the front to the back office.
Bank of Thailand is an example. Their reserves grew seven-fold to USD 226bn in the last 20 years. This prompted the bank to pursue a more efficient way to manage their growing reserves and be ready to tackle any crisis. The core requirement was the ability to seamlessly digest, analyze and apply data insights throughout the investment value chain and decision-making process.
With a better, holistic view of our reserves, we are more readily able to analyse and act on our data, and with greater governance. We are confident that the strong commitment we have placed on achieving operational efficiency, will hold us in good stead and enable us to responsively adapt to market conditions.
Head of Reserve Management at Bank of Thailand
Wongjan Sripaoraya, Head of Reserve Management, Bank of Thailand, shares the requirements for their transformation project with SimCorp and impressive achievements since going live.
We’ve implemented functionality across the entire investment lifecycle to streamline the bank’s vital competencies, including collateral management and foreign exchange. SimCorp Dimension now supports all the bank’s key front office workflows, for instance providing the staff with enhanced pre and post-trade compliance. In the back office, our best-in-class Accounting Book of Record delivers advanced processing of SWIFT and cash management, with superior accounting functionality.
This central bank chose SimCorp for our advanced front office functionality, comprehensive compliance and performance, and investment accounting covering IFRS standards. The bank uses our platform for all internally and externally managed funds on a wide range of instruments, from fixed income, money markets and gold. Increased automation gives the bank improved straight through processing to eliminate data errors and reduce manual tasks, so they can focus on more high-value tasks.
This Asian central bank selected SimCorp to consolidate its reserve and monetary operations and all invested asset classes, onto one core platform. Their transformation project addresses risk management, performance and attribution, compliance, collateral management, settlement and accounting. With our market-leading Investment Book of Record they will achieve a consistent and real-time whole office view of all assets.
The deployment of SimCorp Dimension will enable the bank to modernize its operations, become more efficient, and invest into more asset classes globally. With a better holistic view of all aspects of their operations, the bank will be able to easily analyze and act on data and ensure increase governance and transparency.
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