IFRS 9 Roadmap – Impact to Compliance

IFRS 9 Roadmap – Impact to Compliance

With the time for compliance winding down, IFRS 9 looms ominously like a storm on the horizon. Considering how it impacts your lending area, you’re hoping that this storm passes by, without causing an impact to your business. That’s not going to happen and when you understand the opportunity that this regulation presents, you will welcome the impact. Yes, IFRS 9 will impact your lending and marketing, your policies, stakeholder accountability, your data management and your auditability. If you are operating in a manual lending environment, your concerns will be a shadow of reality. Even if your lending area is automated, the modifications to your automation will be significant. If your lending operations is manual, you should automate as soon as possible. The long-term effect to a manually or poorly automated lending operation will be devastating to regulatory compliance and future business operations. In either case, we have the answer for your financial institution, bank or credit union.

Our solution will move you into a new world of lending automation and efficiency. Though the clock is ticking, eCM Global can remove the storm clouds and offer a ray of light.

Our technology will automate your: IFRS 9 and AML/CFT, KYC policies, IFRS9 credit risk models, stakeholder communications and accountability, data management and auditability, as well as your lending and deposits, both branch and online, while giving you technology for marketing and business development. It will answer the regulatory requirement now and develop a path for the future, opening more opportunities for organic growth through our technology. We have the know-how and technology to assist you in fulfilling your IFRS 9 and AML/CFT, KYC risk management requirements for loans and account openings now and in the future.

What is the roadmap to IFRS 9 credit risk compliance? First, understand who are the stakeholders? What are their roles in your IFRS 9 planning? Stakeholders are exactly that, people with an investment and impact in the IFRS 9 project. These stakeholders could very well be: the Board of Directors, CEO, CFO, lending department heads, risk management, compliance and internal audit. Defining their roles in the project is the foundation for defining the policies that will be needed to ensure compliance of the IFRS 9 regulation. Stakeholders are important and their accountability mandatory. They will be the genesis for the credit risk model, defining the data factors and the provisioning impact. For example, they will play a role when the total expected credit loss provision from your current portfolio is significant enough that it affects your capital requirements.

This is only one example among many possibilities of new IFRS 9 policies that will need to be established, from loan products, to interest rates based on risk, to possible limitations on your portfolio’s stratification, to knowing your customer. Policies and how you enforce them are a critical part of the compliance. The time taken to define your lending and loan product policies due to the IFRS 9 Regulation may seem to be an inconvenient cost, however, automating these policies within your business processes will produce fruit later. Our solution will automatically enforce these policies which will facilitate your compliance and as we will later discuss, will afford you the ability to expand your digital presence.

Another requirement to your compliance of IFRS 9 Regulation begins with identifying the data factors used within your risk model, which is financial institution specific. These data factors will begin your journey into the business of data management, another requirement that is necessary due to IFRS 9. Your responsibility will be to retain the data, its lineage and use. This data management is a responsibility that your organization will need to accomplish for the sake of compliance to the IFRS 9 and AML/CFT and KYC regulations. Our solution will automate the storage and the lineage and use by time and risk model and record all actions taken, enabling you to defend your execution of internal policies. This also may seem to be a burden; however, we ease that burden with our solution, and further, it will soon become apparent that it will benefit you in the future, which we will discuss later.

The other attribute of compliance is the communications requirement to ensure accountability. While this requirement does not seem as apparent a component as the others, it is. Ensuring that the stakeholder team remains responsible will place an additional burden keeping them aware of overrides within the lending policies, changes in loan parameters, overriding credit scores taking on more risk, impacting impairment amounts, etc. Our solution keeps all the stakeholders informed automatically through special real-time alerts, dashboards and reports.

Our risk model is customized to your institution, as it should be; it will be trained according to your factors based upon your data and loan products.

Our IFRS 9 and Risk Management Roadmap to compliance will integrate and automate your loan origination, online lending presence, and offer you the ability to grow organically.