According to our latest market study on "Liquidity and Asset Liability Management Solutions Market Forecast to 2028 – COVID-19 Impact and Global Analysis – by Component and Industry," the liquidity and asset liability management solutions market size is projected to grow from US$ 1,787.59 million in 2022 to US$ 3,009.24 million by 2028; it is estimated to grow at a CAGR of 9.1% from 2022 to 2028.

Rising Number of Regulations and Non-Performing Assets

Compliance has become one of the prominent challenges in the banking industry since the 2008 financial crisis as a direct result of the sharp increase in regulatory fees related to income and credit losses. From Basel's risk-weighted capital requirements to the Dodd-Frank Act and from the Financial Account Standards Board's Current Expected Credit Loss (CECL) to the Allowance for Loan and Lease Losses (ALLL), there are a growing number of regulations that banks and credit unions must comply with reconciliation, which can consume significant resources, often depends on the ability to interact with data from disparate sources. Hence, traditional ways to comply with these regulations often lead to unexpected errors. Therefore, banking and financial institutions are comprehensively adopting digital platforms that collect and mine data, perform in-depth data analysis, and provide insightful reporting for identifying and minimizing compliance risks.

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The increasing number of non-performing assets (NPAs) is another factor hampering the operations of banks. A slowdown in economies in recent years has led to an increase in bad loans or NPAs. A borrower cannot repay these loans, which puts bank liquidity at risk. For instance, according to a report by Kotak Bank, net NPAs in India represent 2.36% of the total credit of the banking system. Such stressed assets make up 10.9% of the banking system's total loans. According to an IMF report, 36.9% of India's total debt is at risk. Hence, banks and private Investment firms are switching to digital platforms to restructure their loan processing models with modern technologies, such as AI and ML, to conduct a thorough background check, which helps them minimize the risks posed by NPAs. The adoption of digital solutions by financial institutions is likely to propel the liquidity and asset liability management solutions market size during the forecast period.

In North America, the US is one of the major countries for liquidity and asset liability management solutions market vendors and service providers. The country hosts the world's second-largest banking, financial service, and insurance (BFSI) sector. Similarly, Canada ranks seventh on the Global Financial Centres Index (GFCI). The robust BFSI sector creates a favorable ecosystem for liquidity and asset liability management solutions market players to launch their solutions and services. Additionally, with a continuous transformation in the North American banking sector and innovation in technologies, banks are preferably adopting advanced analytics methodologies instead of traditional practices.

Based on an article by International Banker, banks in the US hit record-high digital adoption levels in 2021. The report states that only 11% of the US Banks and 4% of the credit unions will be left for the digital transformation by the end of 2022, while 5% of financial institutions claim the completion of their digital transformation strategy.

Further, financial intermediaries in North America have wide access to dollar deposits and wholesale financial markets, which also play a major role in liquidity flow. Among all financial intermediaries, major banks in the US stand out as natural intermediaries for world dollar funding due to their access to the largest dollar deposit base, huge US dollar reserves, extensive global operations, and active currency exchange and derivatives. Hence, the growing uncertainty in the banking industry, coupled with a strong banking sector in the US, is anticipated to propel global liquidity and asset liability management solutions market growth in North America.

The liquidity and asset liability management solutions market report provides detailed liquidity and asset liability management solutions market insights to help key players strategize market growth in the coming years. It also forecasts the upcoming trends and developments for liquidity and asset liability management solutions market growth.

Key Findings of Study:

Based on the liquidity and asset liability management solutions market analysis, liquidity and asset liability management solutions market is segmented into component and industry. Based on component, the liquidity and asset liability management solutions market is segmented into solutions and services. In 2021, the solution segment held the largest share in the global liquidity and asset liability management solutions market share. Based on industry, the liquidity and asset liability management solutions market is segmented into banks, brokers, specialty finance, wealth advisors, and others. Based on geography, the liquidity and asset liability management solutions market is segmented into North America (the US, Canada, and Mexico), Europe (Germany, France, Italy, the UK, Russia, and the Rest of Europe), Asia Pacific (Australia, China, Japan, South Korea, India, and the Rest of APAC), the Middle East & Africa (South Africa, Saudi Arabia, the UAE, and the Rest of MEA), and South & Central America (Brazil, Argentina, and the Rest of South & Central America).

Fidelity National Information Services, Inc.; Moody's Corporation; Oracle Corporation; Wolters Kluwer N.V.; and Finastra International Limited - Prominent Market Participants in the Liquidity and Asset Liability Management Solutions Market

Liquidity management can be referred to as an institution's act of ensuring the availability of sufficient cash and liquid assets for paying the institution's expenses and satisfying any client's loan or savings withdrawal demand. Asset liability management is the process of planning, organizing, and controlling asset and liability volumes, maturities, rates, and yields to minimize interest rate risk and maintain an acceptable profitability level. Liquidity and asset liability management solutions and services aid enterprises manage liquidity and asset liability effectively.

Growing stringency of regulations and rising attention to interest rate risk have been forcing banking institutions to seek comprehensive liquidity and asset liability management solutions. Interest Rate Risk in Banking Book (IRRBB) and EBA stress test under funding planning are some factors that require banks to assess the possible after-effects of an increase in interest rate, the change in values of interest-sensitive assets, and the resultant decrease in regulatory capital. In addition, the BFSI sector has been witnessing increasing regulations related to risk management. Furthermore, persistent fluctuations in interest rates across the US, the UK, Switzerland, Japan, and other large banking nations have led to diminished margins for the BFSI sector. Such factors have promoted the global demand for liquidity and asset liability management solutions. These solutions and services can allow financial institutions to undertake decisions based on scenario analysis, provide a better perspective from both risk and finance-based views, and strongly aid enterprises in complying with regulatory requirements. Most modern-day liquidity and asset liability solutions have integrated funds transfer pricing (FTP), allowing users to distinguish between the profitability of one activity with another.

North America is expected to dominate the market, owing to a strong base of the BFSI sector. The presence of major banking enterprises such as JPMorgan Chase & Co., Wells Fargo & Co., and U.S. Bancorp is promoting the demand for liquidity and asset liability solutions in the region. Asia Pacific is expected to grow at the fastest rate, owing to the rapidly increasing penetration of liquidity and asset liability management solutions, coupled with the high growth of the BFSI sector in the region.

Fidelity National Information Services, Inc.; Moody's Corporation; Oracle Corporation; Wolters Kluwer N.V.; and Finastra International Limited are some of the key market players operating in the global liquidity and asset liability management solutions market. The listing of key players is derived by considering multiple factors such as overall revenue, current managed network services product portfolio, geographical reach, new product launches, market initiatives, and investment in technology up-gradation, partnerships, and other market-related activities. In addition to these players, there are several other important players operating in the managed network services ecosystem, which were analyzed during the course of this market research study, such as IBM Corporation, Intellect Design Arena Limited, SAP SE, Infosys, Ltd. and Experian Information Softwares, Inc.Most of the market initiatives were observed in North American region, which have a high potential of market-related products, solutions, and services.

Few of the important market initiatives from the industry are mentioned below:

2022    Infosys Finacle, part of EdgeVerve Systems, a wholly-owned subsidiary of Infosys, and Suryoday Small Finance Bank (SSFB), announced the successful implementation of the Finacle Core Banking Platform and Finacle Treasury Platform. Finacle will support SSFB’s retail, corporate and payment engines in an on-premise model, supported by IBM’s infrastructure stack.       

2021    Asset-liability management (ALM) solution for insurance firms, RiskIntegrity Investment Insight, has officially launched, according to Moody's Analytics. In order to assist insurers in developing liability-aware investment portfolios and more effectively assessing their investment strategies across a variety of business metrics, the new tool combines data and modelling capabilities from across Moody's Analytics.   

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