Planning & Forecasting as a Part of Treasury & ALM

In today’s world of banking and finance, with a high levels of market volatility, accurate planning and forecasting are pivotal to the success of any bank. These practices are not only essential for sound financial management but also play a crucial role in navigating regulatory requirements and staying ahead of market trends. For banks, integrating Planning & Forecasting into their Treasury and Asset Liability Management (ALM) processes is a strategic necessity.

Let’s delve into the significance of Planning & Forecasting within the context of Treasury and ALM, exploring why it’s a critical component and how banks can leverage it to their advantage.

The Role of Planning & Forecasting

Planning & Forecasting is an integral part of Treasury and ALM for several reasons:

1. Liquidity Management

Effective Planning & Forecasting enables banks to predict their future liquidity needs accurately. This is crucial for ensuring that the bank always has enough liquid assets on hand to meet its short-term obligations while maximizing returns on surplus funds.

2. Risk Management

Forecasting allows banks to anticipate potential risks and develop strategies to mitigate them. In the context of ALM, banks use forecasting to model various interest rate scenarios and assess their impact on the bank’s financial position.

3. Regulatory Compliance

Many regulatory authorities require banks to submit detailed financial forecasts and stress tests. Accurate Planning & Forecasting is essential for meeting these compliance requirements. It also helps banks demonstrate their ability to weather adverse economic conditions.

4. Capital Allocation

Banks use Planning & Forecasting to allocate capital efficiently. By understanding where capital is most needed, banks can direct resources toward projects or investments that align with their strategic goals.

Leveraging Technology

In today’s digital age, Planning & Forecasting has been greatly enhanced by advanced technology and software solutions. Modern Treasury and ALM systems offer sophisticated forecasting tools that enable banks to model various financial scenarios accurately. These systems leverage historical data, market indicators, and economic trends to generate forecasts that guide decision-making.

Dynamic simulation & Planning

Banks are increasingly interested in dynamic simulation and planning. They are therefore looking to find user-friendly solutions where end users in Treasury ALM can run in-house simulations. The transparency and auditability of a system come in many flavors and forms. MORS has “drill-down” capabilities, meaning the user can always drill into the details of the calculations and reports, including NIA, NIM and liquidity risk forecasts.

Forecasting Capabilities

CFOs of banks are constantly seeking ways to improve their forecasting. Accurate forecasting is driven primarily by full data visibility. Better trend analysis will release the staff from routine tasks to focus on high-quality analysis and decision-making. In support of this, treasurers are looking for technology platforms with forecasting capabilities. Forecasting capabilities enable banks to make projections of the future balance sheet that can be generated and take into account a wide range of assumptions, such as product mix, product volume, and pricing assumptions. Good forecasting tools also include earnings forecasts ranging from high-level to detailed forecasts, for example, by product. The forecasts should be presented either in detailed pivot reports or in easy-to-grasp browser-based reports such as the examples below.

Integrated Solutions

With a highly integrated approach, banks can streamline all risk surfaces within a single system that drives data-gathering across all lines of business to achieve effective analysis and strategic planning.

Banks should be able to break silos and cover multiple risk surfaces in one solution. Especially for small and medium-sized entities, it makes perfect sense to have one solution with both Treasury and ALM in one system. Providing one holistic and integrated system without the operational hassle and cost of operating two separate systems. The demand for holistic solutions is currently high and expected to grow in the coming months and years.

Real-time solutions

Modern Treasury and ALM systems work in real-time, providing instantly available calculation results and reports. This ensures the bank always has up-to-date analysis and calculation results and can make better-informed decisions. Given that regulators’ and banks’ internal needs now increasingly demand ad-hoc and instant “what-if” calculations, real-time information is a significant advantage for the bank.


In the realm of Treasury and ALM, Planning & Forecasting is not just a recommended practice; it’s a fundamental component of successful financial management. Accurate predictions about liquidity, risk exposure, and regulatory compliance are essential for a bank’s stability and growth. With the right technology and expertise, banks can leverage the power of Planning & Forecasting to optimize their financial performance and make informed strategic decisions.

Find out more about MORS Treasury & ALM Solution.

Recent articles: