Are you ready for the implementation of IFRS 9?
It was the biggest question of the CEFPRO – IFRS 9 Impairment & Implementation Conference held in London on September 20 and 21. But should banks care much about it? The answer is a definite YES.
The implementation of the IFRS 9 standard is not merely a headache for the accounting departments. Its business impact is inevitable, as the biggest consulting firms expect 25 – 50% increase in the impairment of banks, having immediate negative effect on the P&L. The implementation also requires the rethinking of risk management methods as IFRS 9 impairment requires envisaging future losses (e.g. calculating with impacts of macroeconomic changes), rather than making projections based on the historical performance of portfolios, as banks have been doing it. This rethinking requires large projects (with 11 – 25 FTEs) that have to solve product classification, governance, process management & IT issues. Banks expect to have possibly strategic but even in the best case tactical (major) developments in their information systems. The total cost of these changes may exceed 30 M GBP according to expectations of the largest banks. And all issues should be settled by 01.01.2018. Really challenging.
Fortunately this challenge need not be solved by the banks alone! In the line of valuable speakers we also had a presentation at this conference about the IT challenges of implementing IFRS 9. In this presentation we outlined some areas of IFRS 9 implementations where banks may have ‘ready solutions’ to boost the IT implementation, gaining valuable project time and solving some of the toughest modelling issues under IFRS 9. Where are these areas? To see the answer check out our IFRS concept: