MANAGEMENT OF FINANCIAL DERIVATIVE TRANSACTION VOLUMES DURING 2020-2023: A CASE STUDY OF IRS AND CCS BACK OFFICE OPERATIONS IN COMMERCIAL BANKS

Abstract

This research analyzes problems and proposes solutions to mitigate the impact on the operational processes of the Back Office in a commercial bank during 2020-2023 for Interest Rate Swaps (IRS) and Cross Currency Swaps (CCS) products. The objective is to reduce errors and delays in operations. The study involves interviews with three financial derivatives team members specializing in IRS/CCS: one Assistant Vice President, one Senior Specialist, and one Senior Foreign Operations Officer. The research findings highlight five key issues 1) The dispersion of teams across different locations resulted in workforce reductions and increased workload at the main office 2) Technological limitations in remote work (Work from Home), especially for older employees 3) Complexities in transaction confirmation and verification due to changes in reference interest rates (THOR/SOFR) 4) Delays and errors in preparing ISDA-compliant documentation during the COVID-19 pandemic 5) Challenges in upgrading operational systems and technology amid rapid changes To address these issues, several process improvement strategies are proposed, including: Enhancing workflow processes to increase transaction processing efficiency, reducing processing time and potential errors, Developing training programs and manuals to improve employees’ technological skills, Creating guidelines and conducting training sessions to help employees understand the calculation methods for new reference interest rates, Developing a structured workflow for document preparation to expedite processing, Implementing both short-term and long-term system upgrade plans. The findings of this study not only help resolve current challenges but also serve as a foundation for improving financial transaction management in the future, particularly in response to economic and technological changes.