As the LIBOR transition enters its final stages, organizations are mobilizing resources across the enterprise to achieve compliance with the Financial Conduct Authority (FCA) & Alternative Reference Rate Committee's (ARRC) recommended timelines.
Qualifying operational readiness requires alignment across all the core pillars: people, process and technology. These core pillars, along with KPMG's four keys to a successful conversion, provide a blueprint to tackling the complexities of readying the end-to-end operational readiness for SOFR replacements in front-book transactions.
Given the broad reach of LIBOR transition, a conventional systems testing approach will not hit the mark. Readiness must address connected systems, models, processes and people in both core and satellite operations. This should be a "persistent approach" that will cover front/back book including the likely shifts in the market.
The changes currently being felt across the lending industry are pervasive and significant and will continue to expand at an accelerating pace as the market demand continues to grow.
In order to address these challenges - while at the same time maximizing value - operational readiness programs should focus on the creation of a leaner, more flexible organization. A structured approach to this assessment, ensuring people, process and technology are considered along the entire process lifecycle, should result in a seamless transition that drives trust across all stakeholders - both internally and externally.
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