Balance sheet management matters
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Banks still face harsh realities
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Macro-pressures are reshaping the balance sheet
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Time is up for legacy systems
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Put all your risks where you can see them
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Build a strategic balance sheet management system
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Set your bank apart with integrated stress testing
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Embrace the operating model of the future
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Innovate to optimize
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Balance sheet management still matters
Times continue to be tough for banks. Regulatory and compliance costs remain steep for financial services firms. Despite years of adjustment, compliance demands keep rising, driving up risk and operational expenses while return on equity (ROE) stays depressed. With regulation still increasing, expenditure on risk and compliance operations has skyrocketed while return on equity (ROE) has plummeted. At the same time, regulatory capital buffers have reached a new high and are unlikely to be reduced in the prevailing economic environment. Markets are volatile in the wake of trade tensions. And in October 2025, more than two-and-a-half years after the collapses of Silicon Valley Bank, Signature Bank and First Republic Bank, two more U.S. regional banks have admitted being exposed to millions of dollars of bad loans and alleged fraud. Arguably, the financial services industry is still far safer than it was in 2008, at the time of the global financial crisis. But current conditions continue to seriously erode banks’ profit margins.
Regulatory and compliance issues cost financial services organizations an average of $25 million a year.
What are the biggest banking challenges?
15% pre-2008 11.7% in 2025
ROE
up >300% since 2008 5-6% of capital pre-2008 12-13% of capital in 2025
Regulatory capital buffers
Source: FIS, The Harmony Gap: Finding the Financial Upside in Uncertainty (with Oxford Economics), 2025 Sources: Celent analysis; EY Global Banking Outlook 2025; Federal Reserve CCAR 2025, JP Morgan/Citigroup CET1 ratios
Falling interest rates mean that margins are currently being squeezed from both sides. The prognosis for interest income remains uncertain, as central banks continue to debate whether or not to keep lowering rates in the face of wavering inflation. For the banking sector, the central challenge will be to maintain healthy capital ratios without painful deleveraging or having to drain investment budgets. But along with tighter ALM margins and growing regulatory constraints, banks face other issues, including less funding to drive lending growth and more customers switching to instant access savings accounts. It’s time for a new approach to optimizing the balance sheet.
The importance of balance sheet optimization
“Neglecting balance sheet optimization can lead to severe consequences, ranging from inefficiencies and liquidity shortfalls to regulatory breaches and diminished shareholder value/return. Poor asset-liability management also exacerbates these issues, alongside increased funding costs, suboptimal capital allocation and missed growth opportunities. Without optimization, balance sheet velocity slows down, leaving banks burdened with risks that more agile peers have already offloaded via private credit partnerships, securitization (cash or synthetic) or syndications. This inertia not only increases balance sheet risk but also limits the bank’s ability to respond to market opportunities, erodes competitive edge and curtails fee income generation.”
Source: KPMG, Banks Navigating Uncertainty: The Imperative of Balance Sheet Optimization, September 2025
The digitization of balance sheet management is well overdue. As banks increasingly use technology to provide a differentiated customer experience, risk and control functions must also up their game to help meet new service expectations and provide a seamless customer journey. Regulation demands digital transformation too. With large banks more likely than ever to receive supervisory visits and attract higher capital costs, there’s an urgent need to streamline regulatory activities. In the age of cloud-based, high-performance computing, digitization has moved beyond creating efficiencies and cutting costs to driving competitive advantage and improving capital management. And, for the balance sheet management function in particular, there’s now little excuse to maintain a fragmented patchwork of legacy systems. Effective balance sheet management is now more crucial than ever. Are you ready to break down the data silos that have held it back for so long?
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Can you afford to stay analogue?
“Most forward-thinking firms and executives are now exploring what a digital operating model could look like, including for ALM and balance sheet management. How do these functions use technology advancements to become a more useful resource for the broader business?”
– Cubillas Ding, research director, Celent
Risk managers don’t like surprises. It’s their job to minimize the shocks and maximize earnings, whatever the markets are up to. But in the 2020s, the markets have been anything but predictable which, in turn, has highlighted the problem with having a siloed view of the balance sheet. Historically, banks have calculated different risks in different systems. And, as the 2008 crisis already showed, stapling together disparate results won’t give you a consistent picture of exposure or help you explain the numbers to executives. Only with a single, seamlessly integrated software platform for balance sheet management can you monitor and manage all your key risks in one place – and get a complete, holistic picture of the markets’ impact on your bank.
– Joe Sass, SVP, Risk and Performance, FIS
“On top of interest rate, liquidity and market risk, hedge accounting and IFRS 9 or CECL impairment, a comprehensive solution will cover supporting areas like capital planning, funds transfer pricing, BCBS 239 and regulatory reporting. With the right combination of flexibility and standardization you can not only apply the same modeling muscle to all these functions, but also trace back results to the original data.”
What should your balance sheet management platform cover?
Demand for a holistic, integrated approach to balance sheet management was once driven largely by regulatory stress tests. But now more and more banks see the business value of integration, too. For senior managers, the main new objective has been to more closely align the risk, treasury and finance functions. As well as allowing you to base your calculations and decisions on consistent scenarios, breaking down silos will help reduce inefficiencies and costs, and capture the dependencies between different risk types. To facilitate enterprise-wide risk management and stress testing, you need all your risk areas to share one cash-flow, valuation, stress-testing and projection engine. But you also need flexibility from your balance sheet management software. With highly standardized and easy-to-configure functionality, your different business units can more rapidly meet both external demands like regulatory stress tests and complex, ad-hoc internal reporting requirements. Plus, with formula-driven simulation and forecasting capabilities, you can model even the most complex interdependencies. Ultimately, you’ll have all tools you need for truly strategic balance sheet management. So, you can not only better identify, quantify and monitor risk, but also improve your business model, your margins and your competitive edge.
– Didier Erne, pre-sales consultant, FIS
“You should be able to run any number of ‘what if’ and stress scenario simulations on the balance sheet, while quickly and intuitively shocking and simulating key process drivers such as interest rates, prepayments, spreads, volatilities, any kind of macroeconomic scenario and related dependencies between risk factors.”
Why not ask "what if"?
For holistic and consistent management of the balance sheet, you need a centralized system with five key characteristics. Click the buttons to learn more...
Why wait to adjust to the new pace of change?
“To adapt to today’s financial environment, you need to stay agile across your risk, treasury, finance and compliance functions. Forecasting in an integrated environment allows you to test business plans holistically and understand complex relationships in a rapidly evolving world.”
Robust, intelligent data management capabilities are essential for building a golden source of granular data and providing different aggregated views of risk.
Complete data integrity
You should be able to rely on timely updates in the event of regulatory change – and continuous development in terms of software, hosting and performance.
Future-proof technology
While different teams need the freedom to run specialized models, standard off-the-shelf components help reduce the risk and costs of implementation projects.
Standardized but flexible functionality
If costs are a concern, modular components mean you don’t have to integrate all your balance sheet tasks in one go and can build your new system step by step.
A modular approach
With one engine allowing you to overlay a full range of scenarios, get a common source of cash flows and a single tool for forecasting the entire balance sheet.
A strong simulation engine
By continuing to harness the latest innovative technologies, banks can get an even greater return on their investment in software. Cloud computing allows you to reduce infrastructure costs by up to a third. With potentially unlimited power, cloud environments also bend easily to the demands of hyper-fast computing, so you can run many more models at high speed. With automation, you can put more of your effort into thinking and analyzing rather than clicking buttons and generating reports. In combination with emerging technologies like AI, these innovations will also help solve one of the most complicated problems in balance sheet management – optimization. There are so many different levers you can pull to help maximize earnings, all subject to their own risk limits and restrictions. With AI-powered machine learning, you can more easily identify the scenarios that are most relevant to your balance sheet and drive optimization deeper into your day-to-day risk management practice.
“The number one responsibility of a risk manager is to be imaginative – to grab a pertinent part of the balance sheet, twist it and see what really happens. You need to be able to discover and explore problems before they actually pop up.”
What could advanced analytics tell you?
With innovative software, you’re already in a strong position to ease margin pressure. But are you getting the most value from your current tools? FIS® Balance Sheet Manager – Cloud Edition redefines financial management with cutting-edge technology. Our comprehensive, cloud-native solution empowers you to evaluate, forecast and control all types of financial risks while accelerating calculations. With Balance Sheet Manager – Cloud Edition, you gain precise control over financial risks, leverage the speed and power of the AWS Cloud to accelerate calculations, and scale your operations efficiently with minimal downtime and no unexpected cloud fees. Lift your critical operations to the next level with the security and experience of FIS’ industry-leading cloud services. Unlock your risk infrastructure and put your money to work today.
Reduce costs
Reduce costs by eliminating tasks that don't differentiate your bank.
Gain flexibility with on-demand infrastructure and consumption-based pricing.
Stay in control of decisions and the performance of your service provider.
Improve performance
Secure talented staff
Improve competitive advantage with continually updated technology.
Secure talented staff without having to recruit and retain them in-house.
Gain flexibility
Unlock agility
As winner of the Bank ALM Software of the Year category in the 2025 Asia Risk Technology Awards, and 2024 category leader in the Chartis RiskTech Quadrant® for ALM Solutions, FIS® Balance Sheet Manager can help you ease margin pressure by taking balance sheet management to the next level. With a centralized, comprehensive system and highly automated processes, see all your risks and opportunities in real time, develop a consistent approach to stress testing and scenario analysis, and drive optimal executive decisions. Plus, minimize cost and effort with managed cloud services and BPaaS. Get in touch to learn more.
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FIS is a financial technology company providing solutions to financial institutions, businesses and developers. We unlock financial technology that underpins the world’s financial system. Our people are dedicated to advancing the way the world pays, banks and invests, by helping our clients confidently run, grow and protect their businesses. Our expertise comes from decades of experience helping financial institutions and businesses adapt to meet the needs of their customers by harnessing the power that comes when reliability meets innovation in financial technology. Headquartered in Jacksonville, Florida, FIS is a member of the Fortune 500® and the Standard & Poor’s 500® Index. To learn more, visit FISglobal.com. Follow FIS on LinkedIn, Facebook and X (@FISglobal).
About FIS
FIS Balance Sheet Manager helps financial institutions manage, evaluate and control all types of financial risk so their money works harder. Our technology powers the global economy across the money lifecycle.
Money at rest
Unlock seamless integration and human-centric digital experiences while ensuring efficiency, stability, and compliance as your business grows.
Money in motion
Unlock liquidity and flow of fundsby synchronizing transactions, payment systems, and financial networks without compromising speed or security.
Money at work
Unlock a cohesive financial ecosystem and insights for strategic decisions to expand operations while optimizing performance.
