Navigating liquidity management challenges in the era of digital banking in the United States

This article discusses how digital banking changes the liquidity management practices of banks in the United States by analyzing the challenges posed by digitization, real-time transactions, changing consumer expectations, regulatory pressures, and the competitive threat from fintech. The study conducts a systematic literature review, examining academic literature, industry reports, and regulatory frameworks to develop a comprehensive assessment of liquidity management in the digital banking era. The study found empirical evidence that digital banking, notwithstanding its improvements in transaction efficiency and customer experience, also carries substantial liquidity management risks like greater deposit volatility, increased vulnerability to liquidity shortages, and heightened challenges associated with meeting stringent regulatory requirements such as Basel III. The research also sheds light on some of the most effective technological solutions available for earlier identification of potential liquidity risks such as AI-driven liquidity forecasting, treasury management (TM) applications in real time, and blockchain system-based payment platforms. Moreover, the study recommended adaptive and policies that enable seamless collaboration, such as well-structured data-sharing protocols between conventional banks and fintech companies, that facilitate a liquidity-sharing economy in order to mitigate mismatches in the liquidity needs of different businesses.