Intraday Liquidity Risk Demands Real Time Visibility and Control

Intraday liquidity risk is rapidly emerging as one of the most complex and underdeveloped areas of treasury and risk management, with financial institutions facing mounting pressure to build real-time visibility, integrate fragmented systems, and adapt to a 24-7 payments environment.

The key takeaway from CeFPro’s most recent Treasury & ALM USA event is that success will depend less on theoretical modeling and more on building practical infrastructure, shared data, and cross-functional alignment across treasury, operations, and risk.

As payment systems evolve toward continuous processing, institutions are confronting new operational and risk challenges.

A senior liquidity risk executive at a global investment bank highlighted concerns around monitoring and control in a 24-7 environment, particularly where traditional safeguards may not apply.

The shift introduces new vulnerabilities, including fraud risk, which can be amplified when payments occur outside conventional operating windows.

A treasury consultant at a European bank pointed to real-world examples where fraud had been deliberately timed to exploit gaps in operational coverage.

“Now you actually get that 24-7 time slot,” he said, explaining that continuous processing “opens an entire new world of making payments that shouldn’t be made.”

This evolving risk landscape is forcing banks to reconsider long-standing assumptions around payment limits and controls.

A head of treasury at a regional bank noted that while instant payments are designed to be frictionless, institutions may need to impose limits to protect both clients and balance sheets.

“You should and must advocate some limits for the payments, just to protect the clients before the frauds,” he said, emphasizing that client protection remains the primary objective.

Beyond fraud and control risks, operational complexity is increasing significantly. The move to 24-7 payments requires systems that traditionally operated within defined daily cycles to run continuously.

A treasury consultant at a European bank described the challenge as a “large migration” involving new account structures, system alignment, and continuous processing requirements.

“Certain systems might stop completely after six o’clock and now need to run 24 seven,” he said, highlighting the scale of change required.

This shift is compounded by inconsistencies across systems and geographies. Differences in cut-off times, value dates, and processing cycles create additional complexity, particularly for global institutions operating across multiple jurisdictions.

These inconsistencies make it difficult to maintain a coherent view of liquidity positions and to manage risk effectively in real time.

At the heart of the challenge lies the need for accurate and timely data. A senior liquidity risk executive at a global investment bank stressed the importance of aligning treasury, operations, and risk functions around a single view of liquidity. “You need to have the same visibility that the ops guys have,” he said, warning that without this alignment, institutions are “flying a little bit blind” when managing liquidity risk or conducting stress testing.