Following the banking crisis it is now a regulatory requirement for financial institutions to accurately state the cost of funding.
Whistlebrook’s Funds Transfer Pricing application ( FTP) provides financial institutions with the ability to apply a cost of funding rate to their asset portfolio (typically loans and treasury liquidity) and an investment rate to their liabilities (typically retail deposits and treasury wholesale) in order to provide both product and branch profitability.
The FTP application allows you to break down the cost of funding rate or the investment rate for a particular product into four separate components:
Once the Funds Transfer Price components have been defined, a full FTP can be applied to each account. Loans, overdrawn current accounts and liquidity will attract a cost of funding whilst deposits, in-credit current accounts and wholesale will attract an investment return.