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Niche Liquidity Risk Innovations: A Case Study

1351 Words6 Pages

Time to Market for Niche Liquidity Risk Innovations - Battling the Build Vs Buy Dilemma
Why do Banks Innovate
Why does one innovate? What benefits does one accrue by innovating? Is it just another activity that is undertaken to stay ahead in a competition or browbeat others into agreeing that one is most intellectual? These could plausible reasons for most individuals or institutions to innovate. However, Banks today innovate not because of any other reason but to save on costs which ultimately result in improvement in bottom lines.
Innovating is more critical in areas where banks have substantial leeway in making assumptions. Such innovations help Banks in not only gaining competitive advantage but also removing possibility of duplication …show more content…

Combination Play of Build and Buy
Thus Banks are stuck in quandary. For Risk innovations, they need solutions that are in a way unique. Solutions that are customizable. However they may lack expertise to build such a solution from scratch. While the costs incurred in getting the solution Bank ready have to be lower, the need for solution to perform effectively right from the word go too remains critical.
In such scenario, it is always a prudent step to involve with a software solution partner that is able to assist bank in solutionizing, designing, building & finally testing the tool. Co building improves success probabilities of the solution.
Co building improves the time to market of solutions manifolds while allowing Banks to retain a high degree of customization in the final product. From the software partner's perspective, even though the solution retains a high degree of specificity for the Bank it retains a sufficient degree of customization for meeting another Bank's specific need. For instance if the deposit segregator could separate operational deposits based on average of balance maintained in the accounts the same deposit segregator could be tweaked to find operational deposits based on the minimum balances maintained in the

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