As financial firms maneuver the continued fallout of recent bank failures, analytics and AI leader SAS is expanding its partnership with Microsoft to help banks better manage looming liquidity and interest rate risks. SAS® Asset and Liability Management (ALM), powered by Kamakura Risk Manager on Microsoft Azure, supports multi-period, scenario-based, integrated simulation and valuation for risk management, capital allocation and balance sheet optimization.
Of note, Chartis Research recently named SAS an ALM technology leader in all four quadrants of its new report, ALM Technology Systems, 2023: Market Update and Vendor Landscape.
“A recent ALM study by SAS and Celent revealed that eight in 10 financial services firms are considering significant improvements to their ALM programs,” said Troy Haines, Senior Vice President and Head of Risk Research and Quantitative Solutions at SAS. “Whether they’re adding next-gen technology to enhance existing systems or contemplating new platforms, SAS is recognized for delivering best-in-class risk and finance solutions. Partnering with Microsoft to accelerate risk innovation in the cloud, we broaden our mutual reach and impacts, helping banks, insurers and other financial industry players mitigate and minimize risk in this persistently uncertain climate.”
Reshaping the future of ALM technology
The partnership expansion comes roughly a year after SAS acquired the specialized financial risk management firm Kamakura Corporation – and on the heels of SAS’ recently announced three-year, $1-billion investment in industry-tailored AI solutions.
These strategic investments are advancing the analytics and AI heavyweight’s ALM solutions, which use scalable, cloud-native technology to support robust stress testing and simulation capabilities. Sophisticated, position-level calculations for interest rate, market and liquidity risks can be dynamically aggregated and analyzed to support real-time decision making. Moreover, advanced analytics like machine learning and new generative AI capabilities can help risk managers assess and react to risks in real time through natural language queries.
These advances are already empowering many of SAS’ banking customers.
A spokesperson from a major Australian bank, a SAS customer for more than two decades, stated that its risk management team “leverages SAS Kamakura ALM in a global enterprise capacity for Regulatory and Management Interest Rate Risk in the Banking Book (APS 117), Liquidity (APS 210) and daily management of outstanding positions, including calculation of economic value and stress testing.” The spokesperson added that the bank has a “current migration to the Microsoft Azure cloud underway to utilize the scalability that this affords.”
The path to modernized balance sheet management
Banks across the globe are contending with rising interest rates and stricter policies to address inflation. As a result, liquidity is both scarcer and more expensive. Forward-looking financial institutions must optimize their data, analytics and decision making to improve their risk-adjusted profitability and adequately fund their liquidity risk strategies.
“SAS ALM on Microsoft Azure combines the power of machine learning and new generative AI capabilities to help firms supercharge the speed and accuracy of their liquidity calculations to identify and capitalize on opportunities – potentially adding tens of millions of dollars annually to a bank’s bottom line at little cost,” said Bill Borden, Corporate Vice President of Financial Services at Microsoft.