IFRS 9 Roadmap – Part 2 – Systemic Evolution

IFRS 9 Roadmap – Part 2 – Systemic Evolution

As we discussed in the previous white paper, the IFRS 9 solution will cause your organization to re-think policies from your Board to the financial and lending operations. You will have to consider new data requirements and new accountabilities that will require a new communication matrix. We are confident that together we will comply with all the regulatory requirements. However, there is more, much more to accomplish.

IFRS 9’s systemic evolution is an opportunity not a requirement. We believe that IFRS 9 may be a blessing, disguised as a regulation. A major thought that has been planted, because of the regulation, has caused the transformation of our minds, from looking backward to looking forward. The regulation calls for us to predict the probabilities of something occurring. In the case of financial instruments, the probability of default. The predictability is based upon data collected; borrower information, economic information, historical patterns, etc. The data must be managed and retained for the regulation.

Systemic evolution begins with a thought and evolves through understanding. For example, predictability is dependent on data, with the understanding that the data needs to be maintained and managed due to regulatory requirements. Logic prevails! If I must have analytics and data to fulfill the regulation, why not also use predictive analytics for increasing revenue and services. The systemic evolution that is occurring will be evolutionary to your business.

IFRS 9 regulatory process is important, not only to fulfill the regulation but it will also allow us to expand your digital presence online. The ability to understand the credit worthiness of a borrower, instantly, means your online services can be expanded. However, there is even more that is available, due to this predictive process. What impact could these predictive concepts have on your business plans? Predictive analytics open the floodgates of ideas, expanding potential through the technological excavation of information, previously unavailable.

IFRS 9 is changing the way you’ll look at data, data that no longer only conveys what has transpired but also what can transpire. Because you are now regulated to look forward, to predict possible failure, probability of default, you can also utilize the data and technology to predict; lifecycle requirements, business asset acquisitions, loan products required, etc. As this evolution begins it will appear as the fog of change, however, as it continues to evolve the fog will disappear.

Throughout your organization there will be a data evolution. Data will become an asset, valued as much as a loan, deposit or a new account. Your leaders will begin thinking of new ways to utilize data, it will become systemic. Your financial institution will no longer be seeing what is but rather what could be.

With the tools that we have built, such as, ALFA, our Automatic Lifecycle Financial Analysis, we will be introducing the capability of self-financial analysis for visitors to your website. Tools like this will be using predictive analytics. We believe that this is only the beginning and with our collective efforts the Caribbean will be the prime example of the future of financial institutions, worldwide.