Technology provider Finastra is launching an asset liability management solution aimed at helping small- and medium-sized banks with their balance sheet and compliance needs. 

The cloud-based software-as-a-service (SaaS) solution, named ALM IQ, is a platform-agnostic microservice designed to help banks with data consolidation, operational efficiency and regulatory compliance, according to Finastra. 

“[Small banks] see that the impact the [increased] interest rate is having, it’s really material,” Mehdi Bouasria, product general manager of the treasury and capital markets business unit at Finastra, told Bank Automation News. “They need more capabilities for simulations,” he said, noting 80% of smaller banks still use Microsoft Excel but are looking for systems that will “help minimize human risk of error.” 

Streamlining compliance

ALM IQ is a streamlined version of London-based Finastra’s ARC balance sheet management and regulatory compliance platform, which is used by larger banks, including Paris-based, $1.7 trillion Societe Generale, according to the company.

Finastra clients, including $380 million FinWise Bank and $283 million Delta Bank, will have access to the solution through Finastra’s open platform FusionFabric.cloud, according to Finastra. ALM IQ was in development for two years and several features are carried over from ARC, including cashflow forecasting, delta scenarios for future economic trends and interest rate risk measuring and reporting, Bouasria said. 

The new solution is expected to go live in March, with software updates being pushed to the platform regularly to avoid disruption to business operations, the release from Finastra said. 

The cloud shift

The shift to the cloud is accelerating for financial institutions. 

In 2022, 1,580 of the 2,000 digital banking decision-makers surveyed for IBM’s “Foundations of Banking Excellence,” report said they were in the planning stages of moving their bank’s systems to a cloud-based one, although 1,420 acknowledged that it was difficult to fully embrace the potential of digital transformation without a cloud strategy in place. 

The move toward cloud architecture for many banks in the wake of the COVID-19 pandemic and the need for a more agile solution with shorter downtimes were the reasons for developing ALM IQ, Bouasria said. 

“COVID accelerated cloud adoption and the cloud appetite from smaller banks,” he said. “We are living now during the generational peak of inflation, and for the smaller banks, there is a shift and the convergence from [updating balance sheets] from quarterly to at least monthly.” 

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