The quest for Basel 3.1 readiness 


Hassaan Ahmad

Director, Financial Services

Find out what your bank needs to know to proactively prepare for the upcoming Basel 3.1 regulation changes.

As the proposed July 2025 deadline for Basel 3.1 adoption approaches in the UK, banks face mounting headwinds. These sweeping reforms around liquidity, capital adequacy, and funds transfer pricing will require you to overhaul many of your bank’s processes. 

With most institutions still reliant on fragmented legacy systems and manual data orchestration, turbulence lies ahead. Here are some of the key areas impacted by the new Basel 3.1 regulations.

Liquidity coverage ratio (LCR)

The revised LCR standards demand much closer monitoring of 30-day cash inflows and outflows. Yet, current approaches utilizing batches of spreadsheets make rapid projections and scenario testing difficult.

Revised LCR requirements call for the daily calculation of liquid assets sufficient to cover projected net cash outflows over 30 days in a severe stress scenario. This change demands a massive increase in data orchestration with positions updated daily rather than monthly — meaning at least 10 times more data volume.

New liquidity categories and mandated risk-weighting assessments mean that risk modelling needs to increase significantly. Building out such hyper-scale data and modelling functionality in legacy batch systems will be expensive, time-consuming, and stretch your teams even further.

Capital adequacy ratio (CAR)

Likewise, capital adequacy under the new CAR frameworks of Basel 3.1 hinges on rapidly assessable risk weighted assets (RWA) tied to enhanced asset categorization and new standardized calculations. However, a majority of banks today rely heavily on point solutions, even Excel, for capital planning. This reliance hampers the agile analysis required to model strategic business actions under new CAR thresholds up to 10 quarters forward.

Funds transfer pricing (FTP)

FTP also grows more complex with requirements to incorporate liquidity costs and risks. Still predominately driven off batch engines and manual processes, FTP lacks holistic integration with capital planning and stress testing needs.

The new Basel 3.1 mandates take away the "static" aspect of FTP, requiring it to become dynamic based on evolving liquidity scenarios. A majority of FTP rule tables are updated only annually according to research by Coalition Greenwich, creating disconnects from capital needs during market fluctuations. Significant technology investments are vital to incorporate risk-adjusted liquidity costs while maintaining automation into the general ledger and financial statements.

How you can prepare for Basel 3.1

While these obstacles seem daunting, you can overcome them through three actions:

  1. Make business simplification, data quality, and consolidation top priority workstreams for your bank over the next 18–24 months.
  2. Implement risk data platforms and advanced analytics for increased transparency.
  3. Integrate predictive liquidity, capital planning, and FTP onto a Connected Planning architecture.

Key benefits of a Connected Planning platform

Compliance confidence: Ongoing changes can be rapidly incorporated into models for quick analysis. No more reacting using scattered spreadsheets. Improve confidence in your calculations and reporting.

Strategic decision-making: See how policy options affect profitability, liquidity, and capital simultaneously using advanced “what-if” scenario modeling rather than through disconnected models.

Speed and agility: In-memory computing allows adjustments on-the-fly. Rapid iterations inform decisions rather than waiting overnight for batch runs.

Other key advantages of using a connection layer such as Anaplan include:

  • Dynamic modelling to assess strategy and trade-offs under different regulations, scenarios, and business conditions.
  • Connected planning capabilities, tying regulations to financial performance.
  • Automated data integration to eliminate spreadsheet-based processes.
  • Intuitive user interface reduces IT resource requirements and empowers business teams.

Architected correctly following industry best practices, this planning foundation will turn the obstacles into opportunities — enabling greater agility, confidence, auditability, and competitiveness. 

Overcoming the challenges posed by Basel 3.1 necessitates a Connected Planning platform that combines power, flexibility, and integration. Though the path forward is difficult, the summit provides the ultimate vantage point for those willing to take the climb.

Learn more about how Anaplan can lead your bank to stronger results.