CCR Magazine

CCRi banner ad
You are here  :Home arrow News arrow Lack of collaboration and skills shortage is limiting organisations’ ability to meet IFRS 9 needs
Contact Us Newsletter Signup RSS Feeds

Latest News Headlines

Headlines

 
Commercial Credit News

Headlines

 
Lack of collaboration and skills shortage is limiting organisations’ ability to meet IFRS 9 needs PDF Print E-mail
Friday, 14 October 2016
Risk analytics consultancy Jaywing’s new IFRS 9 Confidence Report reveals that nearly half of lenders (49 per cent) believe an integrated approach is key to helping them meet IFRS 9 requirements. 

The deadlines to meet IFRS 9 requirements begin in January 2018. However, it’s recommended that models are developed, validated, implemented and tested by the end of 2016. This is to allow lenders time to perform the necessary corroboration of the provision figures under IFRS 9, by running them in parallel for a period alongside the current IAS 39 provisions.

Challenges to implementing solutions
While an integrated approach to IFRS 9 is key, more than half of organisations (56 per cent) believe the biggest challenge to building IFRS 9 models is the availability of analytical expertise. This was closely followed by the availability of quality data and infrastructure (55 per cent) and timescales associated with developing a compliant solution (50 per cent).

This lack of time and expertise has resulted in four in five organisations recognising a need for outside help, either through the use of outsourced consultancy or using external software solutions, with only one in five businesses (20 per cent) planning to go it alone. Jaywing is already working with eleven lenders in a consultancy capacity and has recently launched an IFRS 9 software solution, Horizon. Horizon uses machine learning from Jaywing’s extensive banking regulation expertise to deal with all aspects of IFRS 9 impairment modelling. It uses feeds of a lenders’ own data and macro-economic data and its model engine combines Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD) components to calculate life time Expected Credit Losses (ECL).

Confidence by Sector
The report revealed that banks are taking the lead in their preparedness for IFRS 9 with almost a half of banks (49 per cent) already in the implementation and testing phase. This puts banks firmly ahead of other sectors, with only a third of consumer credit companies (33 per cent) and auto finance businesses (29 per cent) testing at this time, with just 11 weeks to go before the year end. Building societies were found to be the least prepared for IFRS 9 with less than three in 10 (27 per cent) in the testing phase, with the majority of building societies still designing and planning their solution.

“While some lenders are feeling confident about their progress towards IFRS 9, others say they are struggling,” said Ben O’Brien, Managing Director at Jaywing. “The best way for lenders to improve their situation is to learn from what’s working with other organisations. That is why tools like automated modelling software are so beneficial. You can quickly and easily adopt advanced models without significantly impacting on business as usual.”

Confidence by job function
The research found that different job functions are viewing their organisation’s preparedness for IFRS 9 in isolation of other departments, and without full visibility of the overall picture. Over a third of economic teams (36 per cent) expect their organisation to complete their parallel runs before the end of the year, however the majority of compliance (33 per cent) and finance teams (43 per cent) don’t think their organisation’s will be ready to parallel run until Q2 2017, with IT departments (31 per cent) even later at Q3 2017.

This demonstrates a clear disconnect between individual teams and when they expect to complete a parallel run, contributing to a divide between job functions and indicating an overall lack of collaboration. As a result, nearly half of those surveyed (47 per cent) agreed that they would use IFRS 9 compliance as an opportunity to improve the infrastructure within their businesses.

O’Brien concluded, “What we’re seeing is that lenders believe an integrated approach and collaboration between teams is key to success. While significant strides have been made in collaboration, it appears that too often, individual departments are still taking a modular view to task completion in IFRS 9. As well as harmonising the models, the parallel run phase should create greater alignment of IFRS 9 requirements across internal divisions, in support of the organisation’s overarching goals.”
 
CCRI
3 October - Guoman Tower Hotel, Central London 

CCRInteractive, in association with Marston Holdings , is the largest and leading one-day conference from the publishers of CCRMagazine – a truly national and international event for the credit industry.

This landmark event allows delegates to: Learn best practice of how to increase profitable sales in today’s economy. Understand the key compliance issues and how they will impact upon you. Discuss the legislative and regulatory framework and how it will effect you. Consider the potential effects of Brexit on your business. Discover the latest innovations in the market to improve your collections. Motivate your staff to achieve ever improved results.

To book to attend in 2017, contact Stephen Kiely  or Alison Lucas. To find out more about being part of this landmark event, please contact Gary Lucas
CCRI 

 Forums International Ltd

Forums International Ltd

 Attendance at your first meeting is free of charge, and please quote reference 'CCR2016' to receive the special 10% discount off of your first annual subscription.

Find out more here.

latest issue

CCR Cover

The latest edition of CCR Magazine, the leading editorial publication in the UK credit industry, is out.

Read the latest issue online

The Credit Excellence Awards

Awards 

Tuesday 3 October - Guoman Tower Hotel, Central London


Do not miss your chance to meet and network with the Winners and Finalists at the Credit Excellence Awards, in association with Hoist Finance.


To book your place to attend, please contact Alison Lucas.


subscriptions

CCR is the premier magazine for consumer and credit professionals. It provides an independent voice to the industry, breaking major news stories and running in-depth features.

As a magazine, it works with and campaigns on behalf of the credit industry to promote its importance as a centre of potential profit and business development to the wider business world.

Subscribe to CCR Magazine

CCR World Magazine


 

Providing information and analysis for thousands of senior credit professionals worldwide, every quarter.

Find out more

GTS Media Ltd
81 Cambridge Road
Southend-on-Sea
Essex
SS1 1EP

Registered in England No: 05483197