Designing a Scalable Fund Allocation System for Global Liquidity Management

Allocation Overview

The fund allocation system is a liquidity‑management platform that moves money between different accounts, providing global account‑level liquidity analysis, position monitoring, and efficient fund transfers for institutions with hundreds of accounts.

Why Allocate

Enterprises, payment institutions, and banks maintain multiple accounts with different purposes, balances, and interest rates. To satisfy business needs, compliance, or profit maximisation, funds are stored according to rules and sometimes need to be moved between accounts – this is the allocation business.

Allocation Methods

Initially allocations were performed manually: staff logged into corporate online banking and transferred funds between accounts. This works for low‑frequency, low‑volume scenarios. A more advanced approach is automated allocation, which can be a simple backend that accepts allocation requests or a fully automated engine that triggers allocations based on real‑time payout demand, account balances, and reserve rules.

System Functions

The system receives allocation requests from business services, decides whether a transfer is needed, records all related data, and follows a generic allocation workflow.

Account and Channel Management

The account‑management module maintains information for all accounts eligible for allocation, ensuring only authorised accounts can participate. Unregistered accounts are prohibited from receiving allocations.

Allocation Reservation Rules

When calculating the amount to allocate, the system must respect reserve rules – a target account must retain a minimum balance. In high‑frequency scenarios (e.g., a payout account that needs funding every five minutes), a 30‑minute allocation interval can be used, with an algorithm that reserves enough funds for the next 30 minutes. The reserved amount is denoted as Mx, where x is the allocation round.

Allocation Amount Calculation

Using the reservation model, the required allocation is computed as: N = M - B + R where M is the payout demand, B is the current account balance, and R is the reserved amount. For example, a payout of 10 billion CNY from account "CMB‑1001" with a balance of 9 billion and a reserve of 5 billion results in N = 6 billion to be allocated.

Allocation Relationship Model

The model determines which source account should fund which destination account based on the payout account’s information.

Allocation Process

The allocation workflow typically includes initiation, review, record generation, payout request, and exception handling.

Initiation : Business or operations staff trigger an allocation via a backend interface or API.

Review : Depending on policy, manual allocations may require approval.

Record Generation : The system creates allocation request records, allocation order records, sub‑order records, payment records, and approval logs.

Payout : After sub‑orders are created, the system calls the payment centre to execute the transfer, updates the status based on channel feedback, and notifies the business side.

Exception Handling : If the channel does not return a final response, manual verification is required; failed allocations trigger a retry or alternative payout flow.