The transition away from LIBOR is expected to be highly disruptive with far reaching impact on systems, processes and platforms.
But financial firms can see this transition as an opportunity to embrace innovation or as a path to continued normality, based on their capabilities.
Organizations have already begun preparing for life after LIBOR and while some early movers have completed their transition planning, others have gone even further and transitioned products from LIBOR to alternate risk-free rates like SONIA. What businesses need is a well-defined LIBOR transition strategy that will help them better manage the impact on systems, processes and platforms. They need a partner experienced in the Finance domain and skilled in technology to move from LIBOR to alternate risk-free rates.
LIBOR transition is centered around the numerous contracts, which organizations have signed up covering businesses and functions including capital markets, commercial lending, retail banking and wealth management, investment management, insurance, market infrastructure and corporate treasury. The key challenges are mining these contracts, flagging the ones with LIBOR exposure and understanding the risks.
To help analyze such contracts for possible LIBOR impact, LTI offers its LIBOR Solution Accelerator, the LIBOR Contracts Analysis and Reporting Engine, or LIBOR CARE.
Requirements Addressed by LIBOR CARE
Key terms dictionary for LIBOR across various asset classes
Artificial Intelligence/ Machine Learning led automated process to extract key terms and their values
Sample contracts to validate the LIBOR models
Retrain the LIBOR models for any specific attributes
Dashboards and reports for viewing results
Salient Features of LIBOR CARE
LIBOR CARE uses a combination of Artificial Intelligence and rules-based approach to analyze contracts for NER
Robust model confidence measurement for easy quality control and model improvements via an intuitive user interface
Based on IBM Watson Discovery and Content Intelligence with a custom pre- trained LIBOR mode
COGNOS Business Intelligence dashboard with drill down features and reports with detailed metrics like:
Overall status of contract processing for LIBOR impact analysis
Maturity-date wise contract counts
Asset-class wise split of impacted contracts
Total financial exposure of impacted contracts
Asset-class wise financial exposure
Lender-wise financial exposure impact for the selected asset-class
Region-wise financial exposure of impacted contracts