Asset and liability management (ALM) remains held back by systems that rarely perform as well as they should, according to ALMIS. Drawing on more than two decades of experience managing balance sheets ranging from £2bn to £2tn, ALMIS argues that the problem is not confined to smaller players. It affects institutions of every size.

The causes, ALMIS explains, vary from bank to bank. Poor data quality, ageing infrastructure, technology limitations, regulatory pressures, competing business priorities, vendor constraints and organisational structures can all play a part. In most cases, several of these factors combine. While there is no quick fix, ALMIS believes two practical changes can cut complexity, sharpen decision-making and support a more strategic approach to managing the balance sheet.

The first is building a single source of truth. ALMIS stresses that effective ALM begins not with advanced modelling but with data. At many institutions, Capital, Liquidity, IRRBB and Financial Planning teams each source and manage their own data, gradually developing separate assumptions, calculations and reporting processes. The outcome is a constant cycle of reconciliation. ALMIS points to the familiar ALCO scenario in which different teams present conflicting versions of the balance sheet, prompting the question: “Which number is correct?”

Time spent chasing these discrepancies adds little value, ALMIS notes, and drains resources that could be directed towards analysing risk, testing scenarios and guiding strategy. When ALM, Risk and Finance share a common data foundation, discussions shift from verifying figures to interpreting what they mean for the business.

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