LIBOR Transition Demo for Banks and Financial Institutions
Mindtree’s partner-led solution FinStinct from Capital Quant Solutions
The London Interbank Offered Rate (LIBOR) widely used in the global financial markets and called the "world's most important Interbank Offered Rates" with a notional value over USD 350 trillion globally is calculated and published daily in five currencies (GBP, USD, EUR, JPY and CHF) and seven maturities (overnight, one week, and 1, 2, 3, 6 and 12 months) by the Intercontinental Exchange Benchmark Administrator (ICE BA).
How Mindtree can help Financial Institutions on effective LIBOR Transition
The transitioning of LIBOR to a new benchmark rate creates a massive opportunity for the IT industry and business consulting services. It is a complicated assignment, and impact varies across financial institutions. Implementation of new alternatives risk-free rates that replaces LIBOR will be different for each financial institution due to product exposure.
Mindtree will establish an enterprise-level governance and program management for LIBOR transition for financial institutions accessing the risk and impact areas covering trading, liquidity, liquidity, pricing, risk valuation, tax, accounting, and legal businesses and related to technology operations. Entire transition road map covers:
- Analysis across enterprise covering all lines of business and geography
- Setting up centralized governance and program management structure
- Identify the right stakeholders required to conduct an assessment, set methodology, impact analysis, and identify the next steps from each business function.
Mindtree can also collaborate with a financial institution in designing the LIBOR transition roadmap in four phases.
- Initial and Exposure Assessment
- Scoping and Program plan
- Transition management and implementation.
- Readiness and Post Go-live managed services
Moreover, Mindtree in collaboration with a FinTech partner viz Capital Quant which provides cognitive automation solution focused on the financial services sector came up with a machine learning and an NLP based solution in LIBOR Transition space. The agreement documents can be uploaded into FinStinct platform and digitized wherein ML and NLP based models are used to identify the key terms of the contract which are extracted. The system identifies whether a contract needs to be re-papered or not. It then provides a workflow to take the agreement from extraction to validation to generation of the amendments. FinStinct platform is a comprehensive cognitive automation solution for the financial services sector to take financial institutions from Documents to Decision making.
LIBOR replacement with alternative risk-free rates is a critical transformational assignment in the global financial market landscape. Banks and Financial institutions should act now for a successful transition of new risk-free rates. Mindtree recommends financial institutions start initial assessment right now to enable cost-efficient and timely transformation. Any delays may have to give a high price for implementation. Mindtree can work with cross-functional teams within banks & financial institutions to implement our transitions plans with the goal of a controlled and smooth transition of LIBOR with minimal business cost and disruptions.