The International Financial Reporting Standard 9 (IFRS 9) introduced the expected credit loss model which requires financial institutions to forecast potential future losses. This standard emphasizes compliance while encouraging a more integrated approach to data analytics and reporting. As it improves transparency and stability in the financial system, it also influences how organizations budget for future expenses and reserves.
An IFRS 9 platform built by Central 1
A challenge for credit unions in complying with IFRS 9 is the gathering of accurate and comprehensive data. Financial institutions often struggle with data spread across multiple systems in banking and lending, lack of electronic tracking, as well as incomplete and inaccurate records. To overcome these obstacles, credit unions need to collaborate with organizations that understand their systems deeply. The IFRS 9 Platform developed by Central 1 calculates expected credit loss in line with the reporting requirements set by the International Accounting Standards Board.
Libro’s Senior Manager, Finance, is on board: “We decided to be a champion of this model as we believe in the concept: having a model built by the system, for the system, and maintained within the system makes perfect sense to us.”
Designed specifically by credit unions for credit unions, its scalable loan loss model helps credit unions understand the factors driving their loan loss numbers. Key features include:
- Unlimited modeling: Run unlimited “what if” scenarios to assess the impact of national and local market conditions.
- In-depth analysis: Use filters to gain insights into the drivers behind loan loss
- Customizable solution: Customize data to be more reflective of a credit union’s specific market on loan types.
- Cost efficiency: No start up, update or additional maintenance costs.
- Built-in security: Central 1 has an externally certified ISO 27001 Information Security Management System to ensure data protection.
Improved compliance efficiency
Our IFRS 9 model includes strong reporting features that help credit unions monitor their performance and meet compliance requirements for auditors and regulators. We offer special reports created with the help of third-party experts, which includes model validations and assessments. By adding these reports to our service, we make the compliance process easier, saving credit unions time and money. The platform provides credit unions with the tools they need to show that they manage risks effectively and comply with regulations, making it easier to work with auditors and regulators while demonstrating their commitment to high-quality financial reporting and risk management.
Benefits beyond compliance
Our IFRS 9 model also offers additional functionality that allows credit unions to analyze their loan loss results more thoroughly:
- Cross-departmental knowledge sharing: The model fosters collaboration across various departments, enhancing overall organizational understanding.
- Transition from Excel to advanced modeling: Moving from traditional spreadsheets to sophisticated models allows for better integration of economic factors into financial assessments.
- Improved decision-making: By aggregating data across Canadian credit unions, institutions can make more informed credit and market decisions. This aggregated data can also be leveraged by other teams, including marketing, to refine product promotion strategies.
- Ongoing research and refinement: The collaborative nature of the model enables continuous research and development, allowing credit unions to focus on relevant economic factors and market conditions.
- Facilitation of monthly reporting: Our model facilitates monthly reporting, ensuring that credit unions remain compliant while also providing insights into their financial health. This regularity helps institutions stay ahead of potential risks and adjust their strategies accordingly.
- One-stop resource: Central 1’s IFRS 9 Client Hub serves as a comprehensive resource center for clients, offering the latest IFRS 9 updates, training and operational support.
The transition to IFRS 9 represents both an opportunity and a challenge for credit unions. Learn more about this product and schedule a demo today.
