IFRS 9 is a high impact symbolic, operational, IT and organizational transformation event for Finance and Risk: an arranged marriage that is turning an uncomfortable courtship and good intentions into a powerful successful partnership that is greater than the sum of its parts. It is one of a few interlinked, unavoidable initiatives in finance, regulation, compliance and risk management that are catalysts to invest in sustainable best practice.
It has common foundations with a number of other key regulatory trends. Therefore the foundations for an easier implementation of IFRS 9 can be achieved if an organization has performed well, for example, in implementing:
- Close working practices and a common culture between risk management and finance with regard to risk-adjusted performance management;
- Rigorous enterprise credit and counterparty risk management and is Internal Ratings Based (IRB);
- CCAR, DFAST and EBA stress testing;
- BCBS 239 for data management;
Organizational support for implementing and running IFRS 9 will require change, through greater involvement of different departments that hitherto have not been as directly active in finance activities. These particularly include risk and regulatory reporting.
The marketplace, including large tier 1 financial institutions, is turning towards the software vendors for solutions. However, this new marriage of Risk and Finance is not reflected in most of the software vendors’ previous experience. There are very few one-stop shops that encompass the whole process from transaction origination to audited P&L and Balance Sheet. Therefore, there are also a lot of integrated, multi-vendor solutions.
There are few fully complete software packages that reflect the target state required by 2018, with deliverables still occurring during 2016 which make some Proofs of Concepts (PoCs) reliant on vendor credibility and trust or successes for the early deliverers.
Large financial institutions’ complex structures demand large in-house, development, implementation and operations teams as well as extra support from all their external professional advisers. All other financial institutions can rely on the packaged software marketplace but they require close support from the large audit firms as well as extra consultancy, development and integration resources. Throughout 2016 and 2017 there is going to be a shortfall in suitably qualified experienced support services teams in this market sector, which, as mentioned earlier, has some new methodological and organizational challenges.
Data to support impairment modeling and calculations is a critical success factor. If not assembled comprehensively, aggregated and normalized rigorously within a formal data management and well-engineered IT architecture then firms’ results will be negatively affected. Many firms, particularly those that have not been through the internal rating based (IRB) experience will have to upgrade their IT architecture or rely on a vendor’s Software as a Service (SaaS) infrastructure.
This report uses Chartis’s FinTech Quadrant™ to explain the vendor landscape. The FinTech Quadrant™ uses a comprehensive methodology of in-depth independent research and a clear scoring system to explain which technology solutions meet an organization’s needs.
This report covers the following vendors offering IFRS 9 technology solutions for financial institutions, including AxiomSL, Fernbach, FIS, Misys, Moody’s Analytics, Oracle, Prometeia, Quantifi, SAP, SAS and Wolters Kluwer FS.