Financial Simulation

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Overview

Model future scenarios. Make confident decisions.
The Financial Simulation module in ALM360 empowers credit unions to anticipate and plan for a wide range of future scenarios. By simulating changes in interest rates, liquidity conditions, member behavior, and balance sheet composition, credit unions gain actionable insights into how strategic decisions and market shifts could impact their balance sheet, earnings, and risk profile. Financial Simulation transforms uncertainty into clarity, supporting both regulatory compliance and strategic growth.

What is the Financial Simulation Module in ALM360?

Financial Simulation is a dynamic modeling tool that allows credit unions to test “what-if” scenarios across their entire balance sheet. Integrated with ALM360’s unified data engine, it provides product detail and real-time analytics, enabling institutions to:

Simulate the impact of rate changes, liquidity shocks, and strategy changes on key balance sheet and income metrics
Assess risk exposure and potential opportunities under multiple future scenarios

Key Features

Comprehensive Simulation Modeling: Model a wide range of simulations, including interest rate changes, deposit runoff, loan growth, liquidity stress, and economic downturns. Apply custom assumptions for more accurate forecasting.
Strategic Planning Enablement: Align financial simulations with your credit union’s strategic objectives, risk appetite, and growth plans. Use simulation results to inform pricing, funding, and investment decisions.
Integrated Analytics: Leverage ALM360’s unified platform to connect simulation results with ALM, CECL, liquidity, and profitability modules for holistic balance sheet management.

Benefits

Unified Platform
Financial Simulation is fully integrated with ALM360, ensuring consistent data and assumptions, seamless workflows, and actionable insights across all modules.
Strategy Enablement
Turn simulation results into strategic action by linking simulation analysis with balance sheet risk management, liquidity planning, and profitability optimization.
Proactive Risk Management
Anticipate potential challenges before they arise by stress-testing your balance sheet against adverse scenarios. This enables your credit union to build resilience and respond quickly to changing market conditions.
Enhanced Collaboration
Facilitate informed discussions among ALCO, board members, and management teams by providing clear, simulation-based insights. Financial Simulation supports transparent decision-making and strengthens governance across your institution.

How it Works

Define Scenarios: Select variables such as interest rate changes, loan and deposit growth, and liquidity changes.
Run Simulations: Apply simulations to your balance sheet using ALM360’s modeling engine
Analyze Outcomes: Review projected financial statements, risk metrics, and policy compliance under each scenario
Compare and Decide: Benchmark simulations side-by-side to identify the most resilient and profitable strategies.

Use Cases

Model liquidity shocks and deposit runoff
Evaluate impact of loan growth strategies
Compare outcomes for strategic decision-making
Support board and ALCO scenario presentations

Financial Simulation FAQs

Credit unions can model interest rate changes, liquidity shocks, deposit runoff, loan growth, economic downturns, and custom stress events.

By visualizing the impact of different strategies, credit unions can make informed decisions about pricing, funding, investments, and risk management.

Yes. Financial Simulation uses the same unified model as ALM, CECL, liquidity, and profitability modules for comprehensive and integrated balance sheet management.

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