Continuing changes in the economy and on the world political scene brought about structural changes in the financial sector, making it increasingly important to meet the challenges imposed by global markets and the resulting need of self-regulation advocated by the Basel Committee which has drawn up rules, regulations and recommendations for compliance by financial institutions within established time periods.

For this purpose, it is necessary to have a product such as FINANWARE™ Asset & Liability Management enabling the analysis, control and management of liquidity risks, interest rates and exchange rates, and providing the data required for the proper implementation of ALM (Asset & Liability Management), so that the institution's decision-making process can rely on information that is organized into specialized models facilitating the analysis and use thereof.

The ALM management support tool provided by FINANWARE™, makes it possible to build the bases to technically measure and analyze the Asset & Liability Management of the institution through models that perform a static and dynamic analysis of the main financial risk indicators, for compliance with the applicable rules as well as for analysis and decision making by the ALCO (Assets and Liabilities Committee), under standardized financial engineering standards and principles and with the possibility of projecting the effects and results of the decisions to be made.

FINANWARE™ Asset & Liability Management bases its internal calculations on information on the actual expiry of operations (financial flows). Consequently, the report generation process gives the user the opportunity to have at hand detailed contract expiry periods of the borrowing and lending operations, including contingent operations, and to generate specialized reports such as expiry gaps, cash flows and a contingency plan in case of runs on banks.

With this detailed information, it is possible to identify foreign exchange gaps in order to manage the foreign exchange position, its profitability and risk. In addition, the user obtains the calculation of the Net present Value and the determination of the institution's Net Interest Income used to evaluate its sensitivity to changes in interest rates by using durations and convexities and the average rates and operation expiry periods of the treasury as well as of all the other areas of the institution.

Using the statistical tool support, contract expiry periods undergo a scenarization process to thus create a data series according to time periods, which data are entered as a parameter for the calculation of new data flows. Furthermore and to obtain a more specific scenario, the solution contains a mechanism allowing each account executive to enter the expected performance of the relevant operations into the customer portfolio, which is then incorporated into the data series by the analyst to finally generate more accurate scenarios based on the knowledge and trends of the operations, so as to analyze the results and impact of the assumptions on the institution's liquidity and risk exposure.

Likewise, by using the statistical FINANWARE™ Asset & Liability Management tool, the Value at Risk (VaR) methodology can be applied for the different positions to which the institution is exposed, supported by functionalities that graphically display the results and the management of multidimensional information.

The value of having accurate and timely information is enhanced by a detailed analysis of operations and flows via the drill-through process that takes the user from the final results in the report to the details of the operations involved to provide relevant information, such as the original amount and the balance, the expiry date and interest rate, the responsible official, the readjustment period, as well as other data. This functionality is supplemented by the data generated in FINANWARE™ Analytical CRM to deepen the information on a customer's operations to date.