Page 73 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes Define Role of Structured Financial Messaging System-SFMS in financial message
communication

Describe Various terminologies used in Banking Technology
Introduction

Treasury management (or treasury operations) includes management of an enterprise's holdings,
with the ultimate goal of maximizing the firm's liquidity and mitigating its operational, financial
and reputational risk. Treasury Management includes a firm's collections, disbursements,
concentration, investment and funding activities. In larger firms, it may also include trading in
bonds, currencies, financial derivatives and the associated financial risk management.
Most larger banks have whole departments devoted to treasury management and supporting
their clients' needs in this area. Until recently, larger banks had the stronghold on the provision
of treasury management products and services. However, smaller banks are increasingly
launching and/or expanding their treasury management functions and offerings, because of the
market opportunity afforded by the recent economic environment (with banks of all sizes
focusing on the clients they serve best), availability of (recently displaced) highly-seasoned
treasury management professionals, access to industry standard, third-party technology
providers' products and services tiered according to the needs of smaller clients, and investment
in education and other best practices.

4.1 Objectives of Treasury Management

To exploit potentials in markets which are becoming integrated and consequently volatile.

To manage funding costs and efficient resource allocation.
To optimisation of profitability through improving rate of return on portfolio, securities
trading and achieving moderate capital gain.
To controlling and minimizing market and credit risks.
To use information technology for the entire gamut of activities.

Comply with the requirements of regulators.
Adhere to internal policy guidelines on money market and investments.
To achieve above objectives, individual banks have to have following policies linked to
overall business strategies and plans.
Specific treasury policies and goals.

Specific guidelines for managing various risks.
Specific guidelines to build I.T. and analytical capabilities.
Specify earning targets on ROE & ROA and acceptable risk levels and limits.
Specify internal structure and decision-making roles.

4.1.1 Organisation Structure

Basic functions of treasury are:
(i) Dealing
(ii) Back; and
(iii) Research and Risk Analysis

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