Funds Transfer Pricing

Comprehensive FTP Advisory

A robust Funds Transfer Pricing (FTP) Framework essentially acts as a yardstick for measuring the profitability of an institution, ensures that business units within a bank take into account the inherent cost and added risk of various sources of funding, and take business decisions which are value accretive. The FTP debate has several moving parts and levels and carries significant weight in banking. 

Deloitte provides tailored services for all institutions looking to implement FTP methodologies based on the institution’s tactical and strategic goals, balance sheet composition, funding mix and customer portfolio, in line with leading global practices.

Framework Review and Gap Assessment: Deloitte provides support in the identification of gaps in the organization’s existing FTP framework, insights on data, systems, methodologies, operating models, strategy, governance, reporting requirements, and remediation for the gaps identified. Deloitte’s recommendations fine tune the FTP framework with the institution’s long-term strategy and establish a workable plan of action with clearly demarcated check points. 

Market Benchmarking: Deloitte can perform comprehensive market benchmarking to evaluate the robustness of the institution’s FTP practices compared to regional and global comparables. The study may involve several dimensions such as practices to manage transference of interest rate risk, liquidity risk, computing cost of liquidity, determining curve adjustments and liquidity premia. 

Framework, Policies and Procedures Development: Our team possesses substantial experience in the development of FTP framework, policies and procedures. The development of a well-thought-out framework will arm the institution with the necessary capabilities by focusing on long-term goals, encouraging sufficient business engagement, and establishing an effective reporting and governance process. 

FTP Methodologies and Model Development: Deloitte provides experienced and specialized support for the development of an FTP methodology best fit for the institution, along with the associated model development. Deloitte can evaluate several model alternatives including, but not limited to, regression-based models and multi-factor models, and to varying degrees of complexity commensurate with the organization’s product lines and business objectives.

Assessment of System Requirements: Deloitte can be engaged to develop system requirements, in line with the agreed FTP methodologies and functional specifications.  

Assistance in Vendor Selection: Deloitte can assist with evaluating, onboarding and liaising with vendors to enhance the existing system setup. This includes the development of the RFP, explanation of business requirements and assessment of the functional design document developed by the vendor. 

Development of User Acceptance Testing Scenarios, Execution and Review of Results: Deloitte’s experienced staff can provide UAT support to institutions looking for expertise in FTP implementation testing. Deloitte’s customizable UAT plan would cover testing of all enhanced areas as defined in the business requirements, to ensure the system achieves the desired outcomes. Deloitte can furnish test scenarios, assist in UAT execution, review test results, and defects management and resolution by vendor.

Training and Knowledge Transfer Sessions:  Our interactive training sessions cover several advanced areas of FTP, to enlighten all involved stakeholders and interested parties on the approach, process transformation and future scalability. 

Bespoke Support: Our personalized support includes walk-throughs of quantitative and technical matters, risk advisory support and provision of market insights impacting all relevant functions. 

The Team

Our Treasury and Market Risk Advisory team comprises of several experienced advisory specialists with extensive experience in enhancing and implementing FTP methodologies across several institutions in the Middle East. Our team of specialists include Chartered Accountants, Chartered Financial Analysts® and Financial Risk Managers accredited by GARP.