With Contract Analytics, US Banks Can Rewrite LIBOR Transition History

May 25, 2021

3 minute read

Top leaders at US banks have watched in anticipation as their UK counterparts struggle with the daunting task of LIBOR retirement. The manual contract analysis has proven so challenging that at least two British banks have moved legal resources from Brexit preparation to LIBOR task forces.

Now it’s go-time for American banks. If American banks wish to skirt the LIBOR blunders of their European counterparts, they need to replace expensive, time-consuming manual contract analysis with a new endgame: AI-powered Contract Analytics. Keep reading to learn why.

Detect & Surface LIBOR References

The resource drain of manual contract analysis is unsustainable, particularly for larger institutions. It can take many months of expensive legal labor to pore over thousands of contracts to not only find mentions of LIBOR, but to do something about them.

LIBOR-impacted documents are often locked away in unstructured data, such as legacy contracts and loan agreements that can’t be automatically searched. Moreover, key contract terms might be searchable, but standard document search tools don’t get at any number of term anomalies that require deeper analysis.

The most expeditious way to find, analyze, and cleanse banks of LIBOR exposure is through an AI-driven Contract Analytics solution. A solution with a trainable AI model makes it easy to search through a variety of sources—data repositories, fileshares, emails—for contracts that contain relevant LIBOR clauses.

To ensure a high rate of accuracy, trainable AI tools allow banking leaders to pinpoint variants of key contract terms, so banks don’t leave themselves vulnerable to lawsuits.

How Leaders Can Rest Easy

Heads of risk, compliance, and legal in the North American banking sector must meet stakeholder expectations and get ahead of looming LIBOR compliance requirements. But banks can’t address their LIBOR exposure without a comprehensive view of their contracts.

Waiting for and utilizing incomplete results from manual contract review is a risky proposition. Banks need reliable answers now.

An elegant Contract Analytics platform will identify LIBOR-linked contracts so that various business leaders downstream can remediate LIBOR exposure. Intelligent data enables:

       ● Chief Risk Officers to know what P&L risk lies in existing contracts
       ● Chief Compliance Officers to align all contracts with new regulations
       ● Legal Counsel to discover those risks and accurately remediate them
       ● Chief Technology Officers to provide the best solution in the shortest amount of time

A robust Contract Analytics solution assures leaders and stakeholders that disruption to the business is minimal and brand names remain intact.

Life Beyond LIBOR

One day, the headache of LIBOR will be a distant memory. Unfortunately, this won’t signal the end of contract-related time drains. Mergers and acquisitions, data migrations, societal and market shifts, and compliance regulations will continually crop up and keep financial institutions on their toes.

Banks should bolster their compliance efforts with an automated and trainable AI solution that can adapt to any regulatory or business shift.

No Time Like the Present

By the end of 2021, LIBOR will no longer be suitable for use as a benchmark rate. Now is the time for US banks to come to grips with this inevitability and set a plan in motion, particularly since they have the added benefit of being second in line behind the UK.

Adlib’s Contract Analytics solution enables banking leaders to:

      1. Quickly and affordably identify and remediate risk in existing contracts
      2. Align all agreements with new regulations
      3. Ensure minimal disruption to the business.

With the right technology, American banks will write a new story in the LIBOR history books.

Ready to Get Started?

Learn how Adlib can help you transition away from LIBOR with confidence.





Sources & Credits

1. MarketsMedia, Capital Markets Faces Libor Transition Challenges

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