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LIBOR-ARR Transition: Using the biggest Change Management Program faced by the Financial Industry to your Advantage

The impending LIBOR to ARR transition is in many experts view the largest change program within the Financial Services industry in history. Estimates place the value of LIBOR at almost $200 trillion (>$300 trn for other IBORs).

In July 2020, the Federal Reserve (US), the Governor of Bank of England, Financial Conduct Authority (FCA), ISDA and other regulatory bodies underlined the need for all industry participants to take action to transition from LIBOR to ARR. In spite of the recent COVID-19 pandemic, the LIBOR (IBOR) transition to ARR will continue and the deadline of December 2021 will not be extended.

Unlike previous mass remediation programs in the industry which were relatively narrow in scope and scale, LIBOR impacts all market participants. Buy-side, Sell-side, Clients, Investors, alike will have to make changes to business processes, systems, and agreements/contracts.

But wherever there is change and wherever there is uncertainty, there is an opportunity

This mass change/remediation of contracts driven by the LIBOR transition provides institutions with the opportunity to digitize contracts and gain full control and visibility of content and terms. Firms should look to transform old contracting processes and systems, and address the contractual risk issues that threaten resilience, slow client onboarding, heighten risk and reduce revenues and profitability.

Other obstacles that have previously dissuaded or prevented firms from transforming legal processes and systems are also now less challenging. Businesses have adopted and, in some cases, embraced cooperative technology and working practices since the pandemic outbreak. Advancement in AI, automation and collaborative technology also eases and simplifies what would have previously been considered a daunting change management program.

Firms should seize this opportunity to digitise, transform and strengthen in preparation of the challenging times ahead.

As sure as night follows day, regulators will introduce further failsafe measures to improve resilience and boost speedy recovery for the industry, especially for the systemically important financial institutes. Firms need to be ready and in a state of preparedness.

At SirionLabs, we are well aware of the challenges and opportunities that the LIBOR transition has thrown up at organizations. With our unique experience of helping some of the largest global banking and financial institutions transform their contracting processes, we are well-positioned to help organizations in this complex transition with our AI-powered CLM platform.

If you would like to know more about how Sirion CLM can simplify the LIBOR transition process for your organization, you can download our LIBOR solution brief here. If you would like to get in touch, feel free to write to me at [email protected].

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