Dan Shmueli - Senior Vice President, AxiomSL
One could look at FDIC 370 as the next regulatory hurdle faced by deposit taking institutions, OR an opportunity to be positioned for growth in a rising rate and increasing liability environment. AxiomSL’s experience in implementing FDIC 370 has revealed the following benefits for its clients:
Show me the money
Given the multiple deposit taking functions present in a Financial Institution, developing a view of all their deposits is a daunting one. The regulation not only stipulates consolidating this information across core account processing systems and business lines, but also maintaining all associated financial metrics such as accurately calculating applicable FDIC insurance for all account holders. Having said that, a consolidated and granular view of deposits provides retail and corporate banking leaders a nuanced perspective on interest expense liabilities for the institution.
24 Hours… and it’s not a TV show
A key requirement of FDIC 370 is that deposit taking institutions have to be able to provide the said regulatory outputs within 24 hours of a request from the FDIC. Manual processes and unconsolidated data will make it very difficult for institutions to comply with and manage this requirement. By implementing a standardized data model that reflects the bank’s retail, wealth management and corporate banking deposits, along with a template that accurately reflects the business rules to meet the regulatory specification, our solution will help organizations sleep better at night. The FDIC’s yearly executive level attestation forces institutions to be able to trace the outputs back to their depository source systems.
Keeping up with the classifications
Another benefit of this exercise is that institutions have a better understanding of their deposit portfolio. They have to classify account types and product types across multiple systems. As data flows into a centralized regulatory reporting environment, the AxiomSL solution includes an out-of-the-box rule based classification system that handles the complexities that are ever present in a multi-business line bank. The classification of deposits is the basis for critical management reporting on funds flowing through different product lines, enabling discussions on product and customer profitability.
Right product, right channel, right customer
Once all of the deposit taking data is on an intelligent platform, business leaders can begin to identify areas of cross selling opportunities. For instance, a balance threshold over a certain amount in a joint account could be upsold a trust account, benefiting the customer with the most appropriate product while maximizing their insurance coverage. In addition, deposit taking institutions now have the basis to discuss the most optimal ways to reach retail customers or business clients to drive a future view of deposits and products for the organisation.
Rising interest rates lifts all deposits
As rates rise, we are beginning to see deposit taking institutions begin promotions to attract monies to savings accounts and certificates of deposit. Given the passage of the tax bill in the United States, there is going to be an additional 10 to 14% of cash flow that will be generated by SME and Corporate clients. This means that Financial Institutions will need to develop a granular capability to project deposit liabilities that may present themselves under various product scenarios.