Chartis Names FICO a Category Leader in IFRS 9 Solutions

Independent research firm cites data, analytics and governance challenges for financial institutions in meeting new accounting standard

Analytic software firm FICO today announced that it has been named a Category Leader in IFRS 9 solutions by research firm Chartis. The Chartis Research report IFRS 9 Technology Solutions: Market Update 2017 cites the steep challenges financial institutions face in meeting the accounting regulation, which will cause banks to hold more capital in the form of provisions against possible credit losses.

More information: http://www.fico.com/en/solution/fico-ifrs-9-impairment-management

“Like other regulatory mandates of the past decade, IFRS 9 is another transformational event for all financial institutions (FIs),” the report states. “In all likelihood, it will reduce FIs’ profits and retained earnings, increase their loan loss provisions, and have a negative impact on their regulatory and economic capital. To mitigate these impacts, FIs will have to rely heavily on the rigor of their data management and the quality of their data, and on the application of Expected Credit Loss (ECL) modeling and overall governance.”

The FICO IFRS 9 Impairment Management Solution includes industry-leading predictive modeling for loss forecasting; software for high-speed model execution, loss reporting, process governance and “what-if” scenario analysis; and strategy consulting from advisors with extensive domain and analytics expertise.

“Effectively addressing the challenges of this new standard will enable senior management to make better-informed, forward-looking strategic risk management decisions,” said David Binder, senior director and global IFRS 9 program lead at FICO, who formerly led Barclaycard’s global impairment, capital demand and stress testing team. “Getting there, though, won’t be easy. In our work with customers on IFRS 9, we’re bringing an unmatched amount of expertise in risk modeling and forecasting, along with a focus on governance and control.

“Ultimately, IFRS 9 isn’t just about compliance,” Binder added. “It’s about better credit risk management. Once you’re set up to comply with the standard, you need to focus on revising your credit strategies, so that you can rebuild some of the profitability you will lose under the new requirements. That’s where our software, consulting and real-world impairment management experience make all the difference.”

FICO experts blog about IFRS 9 and other regulations affecting financial institutions at http://www.fico.com/en/blogs/tag/regulation/.