How to find the remarkable value hiding in CECL compliance data

There is no “easy button” for CECL. Adhering to the new standards will take time, effort and considerable planning, but it is possible to turn the pain of compliance into the benefit of strategy.

The new current expected credit loss mandate (CECL) has made broad, sweeping changes to credit measurement and reporting. To meet CECL requirements, banks and credit unions must use historical information, current conditions and economic forecasts to estimate expected losses. The new guidelines require collecting, sorting and analyzing significant amounts of data from various sources as well as altering methodologies to estimate expected losses.

The CECL requirements mark the first time this much data has been aggregated at the individual financial instrument level. But once that history – that instrument-level data – has been captured, good things can happen. With the right data, financial institutions can begin improving decision making around credit risk, interest rates and profitability.

Working Toward CECL Standards

With less than two years to go, financial institutions should be working through the necessary steps to adhere to the new standards. The multiyear implementation period is intended to give organizations a chance to prepare, but time will go quickly.


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