1. Asset Liability Management User Guide
  2. Introduction to Oracle Asset Liability Management
  3. Overview of Oracle Financial Services Asset Liability Management
  4. Oracle Financial Services Enterprise Performance Management
  5. OFS Funds Transfer Pricing

3.1.3.3 OFS Funds Transfer Pricing

Oracle Financial Services Funds Transfer Pricing (OFS FTP) is the industry's first and leading matched maturity funds transfer pricing application, enabling financial institutions to determine the spread earned on assets, from funding sources, and the spread earned as a result of interest rate exposure for every each customer relationship. This enables accurate assessment of profitability along the product, channel, and business lines, as well as the centralization of interest rate risk so it can be effectively managed. Oracle Financial Services Funds Transfer Pricing is fully integrated with Oracle's Financial Services Analytical Applications and shares a common customer account-level data model.

The transfer pricing process isolates the four major sources of a bank's margin:

  • The spread earned on assets
  • The spread earned on liabilities
  • The spread earned or lost as a result of interest rate exposure
  • The spread earned or lost as a result of embedded options such as prepayments

Measuring and managing the interest margin offers tremendous profit opportunities. By separating the components of net interest income, OFS FTP isolates rate risk into your funding center where it can be centrally managed. In turn, business units are held accountable for what they can control: pricing and profitability. Armed with this highly accurate information, companies make solid, supportable decisions that lead to increased success in the marketplace.