Funds Transfer Pricing and Enterprise Risk Management for Banks Kit (Publication Date: 2024/03)

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Discover Insights, Make Informed Decisions, and Stay Ahead of the Curve:



  • Is your organization extracting the full economic value of a given asset considering the value proposition, the customers willingness to pay and the assets risk profile?
  • What is the changes in how risk is managed in your organization in the last few years?
  • Has a trend developed wherein your organization assumes increased risk without receiving increased rewards?


  • Key Features:


    • Comprehensive set of 1509 prioritized Funds Transfer Pricing requirements.
    • Extensive coverage of 231 Funds Transfer Pricing topic scopes.
    • In-depth analysis of 231 Funds Transfer Pricing step-by-step solutions, benefits, BHAGs.
    • Detailed examination of 231 Funds Transfer Pricing case studies and use cases.

    • Digital download upon purchase.
    • Enjoy lifetime document updates included with your purchase.
    • Benefit from a fully editable and customizable Excel format.
    • Trusted and utilized by over 10,000 organizations.

    • Covering: ESG, Financial Reporting, Financial Modeling, Financial Risks, Third Party Risk, Payment Processing, Environmental Risk, Portfolio Management, Asset Valuation, Liquidity Problems, Regulatory Requirements, Financial Transparency, Labor Regulations, Risk rating practices, Market Volatility, Risk assessment standards, Debt Collection, Disaster Risk Assessment Tools, Systems Review, Financial Controls, Credit Analysis, Forward And Futures Contracts, Asset Liability Management, Enterprise Data Management, Third Party Inspections, Internal Control Assessments, Risk Culture, IT Staffing, Loan Evaluation, Consumer Education, Internal Controls, Stress Testing, Social Impact, Derivatives Trading, Environmental Sustainability Goals, Real Time Risk Monitoring, AI Ethical Frameworks, Enterprise Risk Management for Banks, Market Risk, Job Board Management, Collaborative Efforts, Risk Register, Data Transparency, Disaster Risk Reduction Strategies, Emissions Reduction, Credit Risk Assessment, Solvency Risk, Adhering To Policies, Information Sharing, Credit Granting, Enhancing Performance, Customer Experience, Chargeback Management, Cash Management, Digital Legacy, Loan Documentation, Mitigation Strategies, Cyber Attack, Earnings Quality, Strategic Partnerships, Institutional Arrangements, Credit Concentration, Consumer Rights, Privacy litigation, Governance Oversight, Distributed Ledger, Water Resource Management, Financial Crime, Disaster Recovery, Reputational Capital, Financial Investments, Capital Markets, Risk Taking, Financial Visibility, Capital Adequacy, Banking Industry, Cost Management, Insurance Risk, Business Performance, Risk Accountability, Cash Flow Monitoring, ITSM, Interest Rate Sensitivity, Social Media Challenges, Financial Health, Interest Rate Risk, Risk Management, Green Bonds, Business Rules Decision Making, Liquidity Risk, Money Laundering, Cyber Threats, Control System Engineering, Portfolio Diversification, Strategic Planning, Strategic Objectives, AI Risk Management, Data Analytics, Crisis Resilience, Consumer Protection, Data Governance Framework, Market Liquidity, Provisioning Process, Counterparty Risk, Credit Default, Resilience in Insurance, Funds Transfer Pricing, Third Party Risk Management, Information Technology, Fraud Detection, Risk Identification, Data Modelling, Monitoring Procedures, Loan Disbursement, Banking Relationships, Compliance Standards, Income Generation, Default Strategies, Operational Risk Management, Asset Quality, Processes Regulatory, Market Fluctuations, Vendor Management, Failure Resilience, Underwriting Process, Board Risk Tolerance, Risk Assessment, Board Roles, General Ledger, Business Continuity Planning, Key Risk Indicator, Financial Risk, Risk Measurement, Sustainable Financing, Expense Controls, Credit Portfolio Management, Team Continues, Business Continuity, Authentication Process, Reputation Risk, Regulatory Compliance, Accounting Guidelines, Worker Management, Materiality In Reporting, IT Operations IT Support, Risk Appetite, Customer Data Privacy, Carbon Emissions, Enterprise Architecture Risk Management, Risk Monitoring, Credit Ratings, Customer Screening, Corporate Governance, KYC Process, Information Governance, Technology Security, Genetic Algorithms, Market Trends, Investment Risk, Clear Roles And Responsibilities, Credit Monitoring, Cybersecurity Threats, Business Strategy, Credit Losses, Compliance Management, Collaborative Solutions, Credit Monitoring System, Consumer Pressure, IT Risk, Auditing Process, Lending Process, Real Time Payments, Network Security, Payment Systems, Transfer Lines, Risk Factors, Sustainability Impact, Policy And Procedures, Financial Stability, Environmental Impact Policies, Financial Losses, Fraud Prevention, Customer Expectations, Secondary Mortgage Market, Marketing Risks, Risk Training, Risk Mitigation, Profitability Analysis, Cybersecurity Risks, Risk Data Management, High Risk Customers, Credit Authorization, Business Impact Analysis, Digital Banking, Credit Limits, Capital Structure, Legal Compliance, Data Loss, Tailored Services, Financial Loss, Default Procedures, Data Risk, Underwriting Standards, Exchange Rate Volatility, Data Breach Protocols, recourse debt, Operational Technology Security, Operational Resilience, Risk Systems, Remote Customer Service, Ethical Standards, Credit Risk, Legal Framework, Security Breaches, Risk transfer, Policy Guidelines, Supplier Contracts Review, Risk management policies, Operational Risk, Capital Planning, Management Consulting, Data Privacy, Risk Culture Assessment, Procurement Transactions, Online Banking, Fraudulent Activities, Operational Efficiency, Leverage Ratios, Technology Innovation, Credit Review Process, Digital Dependency




    Funds Transfer Pricing Assessment Dataset - Utilization, Solutions, Advantages, BHAG (Big Hairy Audacious Goal):


    Funds Transfer Pricing


    Funds Transfer Pricing is a process used by organizations to determine the profitability of their assets by considering factors such as value proposition, customer willingness to pay, and risk profile.


    1. Solution: Develop a robust fund transfer pricing framework that considers the value and risk of assets.

    Benefit: Increased accuracy in determining economic value and mitigating risk associated with asset transfer and pricing.

    2. Solution: Utilize industry benchmarks and market data to inform fund transfer pricing decisions.

    Benefit: Improved decision-making based on external market trends and performance metrics.

    3. Solution: Implement a dynamic fund transfer pricing approach that regularly adjusts for changing market conditions.

    Benefit: Increased flexibility and responsiveness to market changes, leading to optimized pricing decisions.

    4. Solution: Incorporate stress testing into the fund transfer pricing process to assess the impact of potential economic downturns.

    Benefit: Proactive risk management and better preparedness for potential financial crises.

    5. Solution: Strengthen communication and collaboration between risk management and pricing teams to ensure alignment of strategies.

    Benefit: Enhanced coordination and more holistic risk management approach in determining fund transfer pricing.

    6. Solution: Regularly review and update fund transfer pricing policies and procedures to ensure they align with evolving market conditions and business objectives.

    Benefit: Improved effectiveness and relevance of fund transfer pricing strategies in achieving business goals.

    7. Solution: Utilize advanced analytics and data modeling techniques to inform fund transfer pricing decisions.

    Benefit: Increased accuracy and precision in determining economic value and assessing risk associated with asset transfer and pricing.

    8. Solution: Conduct regular audits of fund transfer pricing processes and procedures to identify and address any potential vulnerabilities or inefficiencies.

    Benefit: Enhanced oversight and quality assurance in fund transfer pricing practices.

    9. Solution: Provide training and education to employees involved in fund transfer pricing to ensure a thorough understanding of the process and its importance.

    Benefit: Increased knowledge and awareness leading to improved decision-making and risk management practices.

    10. Solution: Implement a robust governance structure to oversee the fund transfer pricing process and ensure compliance with regulatory requirements.

    Benefit: Stronger control and oversight leading to better risk management and regulatory compliance.

    CONTROL QUESTION: Is the organization extracting the full economic value of a given asset considering the value proposition, the customers willingness to pay and the assets risk profile?


    Big Hairy Audacious Goal (BHAG) for 10 years from now:
    By 2030, our organization will be a leader in Funds Transfer Pricing (FTP), extracting the full economic value of all assets through a comprehensive and dynamic pricing strategy. We will have achieved this by leveraging advanced data analytics and market intelligence to accurately assess the value proposition of each asset, understand customers′ willingness to pay, and evaluate the risk profile of every transaction.

    Our FTP processes will be fully automated, allowing for real-time monitoring and adjustments based on market conditions and customer behaviors. Our pricing models will be constantly updated and customized for each asset and customer segment, ensuring optimal profitability for the organization.

    We will have built strong partnerships with key stakeholders, including regulators, financial institutions, and customers, to gain a deep understanding of the market landscape and define the most appropriate pricing strategies for our products and services.

    Furthermore, our organization will be recognized for its excellence in managing liquidity and balance sheet risk, thanks to our sophisticated FTP models that accurately measure and allocate funding costs and profitability metrics.

    As a result of our ambitious FTP goals, we will not only increase profitability but also enhance customer satisfaction, drive sustainable growth, and establish ourselves as an industry leader in the competitive financial landscape.

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    Funds Transfer Pricing Case Study/Use Case example - How to use:



    Client Situation:
    The client is a mid-size commercial bank operating in the United States, with a total asset value of $500 million. The bank is facing challenges in accurately pricing and managing the profitability of its assets. The existing system of cost allocation is based on traditional transfer pricing methods, such as cost-plus or market-based pricing, which fail to capture the full economic value of the bank′s assets. This has led to sub-optimal pricing decisions, resulting in lost revenue opportunities and hindering the bank′s growth potential.

    Consulting Methodology:
    The consulting approach involves implementing Funds Transfer Pricing (FTP) methodology to assess the economic value of the bank′s assets and allocate costs accordingly. FTP is a strategic management tool used to determine the profitability of a bank′s assets and liabilities by assigning a price to the funds transferred between different business units. It takes into account the risk profile and cost of capital attached to each asset, providing a more accurate measure of their economic value.

    The first step in the methodology was to conduct a detailed review of the client′s organizational structure, financial statements, and product portfolio to understand the bank′s current pricing practices. This was followed by a thorough analysis of the bank′s cost structure, including both direct and indirect costs, to identify areas of inefficiency and improve cost allocation methods.

    Once the cost structure was established, the next step was to categorize the assets into different risk buckets based on their risk profile, liquidity, and maturity characteristics. This was done to accurately assign a cost of capital to each asset and determine its contribution towards the bank′s overall profitability.

    Next, the team developed an FTP framework that enables the bank to measure the economic value of each asset using a combination of market rates, risk premiums, and other relevant factors. This framework also facilitated the calculation of the customer′s willingness to pay for each asset, considering the value proposition offered by the bank.

    The final stage of the methodology involved implementing the FTP model into the bank′s existing systems and processes. This included training the bank′s staff on the new methodology and integrating it with the bank′s pricing and performance monitoring systems.

    Deliverables:
    The consulting team delivered a comprehensive analysis of the client′s cost structure, risk profile, and customer value proposition. This was accompanied by an FTP framework customized for the bank′s specific needs, including an implementation roadmap and a change management plan. The team also provided ongoing support to the bank during the implementation stage.

    Implementation Challenges:
    The main challenge faced during the implementation of the FTP methodology was the resistance from the bank′s staff towards a new way of pricing assets. To overcome this, the team conducted several training sessions and workshops to educate the staff on the benefits of FTP and how it could improve the bank′s profitability. Additionally, a change management plan was put in place to ensure a smooth transition and minimize disruption to daily operations.

    KPIs and Management Considerations:
    The success of the FTP implementation was measured through various KPIs, including the improvement in asset pricing accuracy, increase in revenue from assets, and decrease in operating costs. In addition, the bank′s management closely monitored customer satisfaction and retention rates to ensure that the new pricing strategy did not negatively impact their relationship with customers.

    Further, the bank′s management also considered the long-term implications of the FTP methodology, such as its impact on the bank′s competitive position in the market and its ability to attract and retain top talent. Regular reviews and updates were conducted to assess the effectiveness of the new pricing strategy and make any necessary adjustments.

    Citations:
    1. Funds Transfer Pricing – Maximizing Profitability through Efficient Asset Pricing, KPMG.
    2. Unlocking the Full Potential of Funds Transfer Pricing, Oliver Wyman.
    3. The Benefits of Funds Transfer Pricing within Banks, Reuters Events.
    4. Transfer Pricing in Banking: Drivers, Incentives and Outcomes, The Balance.
    5. The Use of Funds Transfer Pricing to Optimize Profitability, Capco.
    6. Funds Transfer Pricing in Banks: An Overview, Journal of Economics.
    7. Funds Transfer Pricing: Concepts, Methods and Challenges, Journal of Management Studies.
    8. Funds Transfer Pricing for Commercial Banks: A Comprehensive Review, International Journal of Innovative Research in Science.
    9. Role of Funds Transfer Pricing in Banking Industry, Journal of Economics and Financial Analysis.
    10. Application of Funds Transfer Pricing in Assessing Banks Profitability, Journal of Finance and Investment Analysis.

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