Equifax, a global data, analytics, and technology company, and Wolters Kluwer’s Finance, Risk & Reporting (FRR) business, are teaming up to provide an end-to-end Current Expected Credit Losses (CECL) solution.
The companies are combining their respective CECL offerings and capabilities to help financial institutions comply with new standards instituted by the Financial Accounting Standards Board (FASB) for a complete solution that ensures an integrated and supportable framework.
These new CECL standards will take effect in the first quarter of 2020 for financial institutions that are registered with the U.S. Securities and Exchange Commission (SEC), and in the first quarter of 2021 for financial institutions that are not registered with the SEC.
The OneSumX CECL solution leverages Wolters Kluwer’s integrated finance, risk and reporting platform, enabling compliance with all CECL requirements, from data management and governance, to credit risk models, expected credit loss calculations, accounting and disclosures. OneSumX CECL, which will now house Equifax’s SmartReserve™ models, also leverages its state of the art accounting framework with Wolters Kluwer’s Regulatory Update Service (RUS) to apply and maintain all required allowance accounting, producing all FASB mandated disclosures.
Equifax’s SmartReserve™ offering helps SEC-registered financial institutions comply with CECL requirements by obtaining the necessary historical loan performance data and insights for compliance with the standard. The models within SmartReserve use robust historical data, producing a reliable life of loan loss estimates.
Todd Lawrence, General Manager of Wolters Kluwer FRR Americas, commented, “All firms impacted by CECL need to ensure they are firmly on the road to compliance. Equifax brings credit content and methodologies to this exciting partnership which draws on our award winning OneSumX suite of technology solutions and deep rooted expertise in integrated finance, risk and reporting. The combined offering uniquely facilitates a successful CECL process in the eyes of regulators, auditors and boards of directors.”
"This is new territory for many lenders as they may not have the infrastructure to support these large amounts of data, and mid-tier and smaller banks and credit unions and lenders may not have the capacity to perform the modeling in-house," said Amy Graybill, Vice President, Enterprise Insights & Core Data Products, Equifax. "Our SmartReserve provides the assistance lenders need to help protect their business against non-compliance with new CECL standards, along with historical pre and post-recession data that is needed to accurately forecast future credit losses and calculate required reserves."
SmartReserve offers flexibility for benchmarking and assumption setting using historical performance by product, geography, score range, and vintage to establish guardrails and benchmarks for CECL analysis. The solution also helps banks develop loss rate assumptions that provide additional support to CECL model outputs for discussions with regulators. The data allows customers to compare portfolio loss performance with peer banks to inform the bank’s credit policy and improved credit decision making.
Wolters Kluwer FRR, which is part of Wolters Kluwer’s Governance, Risk & Compliance division, is a global market leader in the provision of integrated regulatory compliance and reporting solutions, supporting regulated financial institutions in meeting their obligations to external regulators and their own boards of directors. Last year Chartis Research named Wolters Kluwer a Category Leader in its CECL Technology Solutions report.