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Liquidity-as-a-Service: Are you stranded at the drive-in?

12 September 2018

Enabling your wealth management clients to unlock the liquidity in their portfolios drives customer retention and safeguards profitability – but only when supported by a scalable system that manages credit risk in close to real-time.

 

Digitization is driving the commoditization of traditional wealth management (WM) services, making wealth clients increasingly difficult and costly to serve.  This is impacting negatively on the WM business, forcing wealth advisors to become more creative, diverse and personalized in the services they offer.

At the same time, investors are reluctant to liquidate successful investment strategies in order to finance other activities, particularly while interest rates are so consistently low.  Instead, ultra-rich and HNW investors are unlocking liquidity from their portfolios in startling numbers.

Wealth lending now exceeds half a trillion dollars at America’s biggest banks including Bank of America, Merrill Lynch, JP Morgan, Wells Fargo and, Morgan Stanley.  As the wealth segment expands rapidly, demand for securities-based lending is already growing apace.

Banks which are already successfully offering liquid lending via Securities-Based Lending (SBL) – and thereby retaining clients and growing AuM – are doing so with automated and scalable systems that mark-to-market portfolios and LTVs on a daily basis.  Close to real-time credit risk management and triage capabilities are a must-have.  Further, these banks monitor overall book health and concentration risk at an aggregated level on a daily basis too.

Without these capabilities, the capacity of your SBL business to scale and handle severe market volatility events is limited. Get the right infrastructure in place, manage your business with great analytics – and be well-protected to deal with any reversals.

Then relax and enjoy the movie.

"Finance's new holy grail can be defined as liquidity as a service."

- Forbes

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