Survey: Most Companies Aren't Ready for CECL

CECL (Current Expected Credit Loss) readiness is a source of nightmares for some, and merely a blip on the radar for others. Regardless of your affinity with CECL, its deadlines are looming.

Survey Shows Many Companies are Still Researching Solutions

CECL (Current Expected Credit Loss) readiness is a source of nightmares for some, and merely a blip on the radar for others. Regardless of your affinity for this new accounting standard, its deadlines are looming.

A recent ABA Banking Journal article suggests that parallel testing should begin as soon as Q4 2018 for lenders with a 2020 implementation deadline. However, this same article indicates that less than 1 in 10 have even begun running parallel models.

During a recent Equifax webinar “CECL Readiness: Putting the Puzzle Together,” we asked attendees about their own level of preparedness for CECL. Our findings indicate there is a lot for companies to do.

  • 29% of respondents indicated they are implementing a solution now
  • 35% said they are still researching solutions
  • Another 20% are reviewing their short list
  • Surprisingly, only 1% of respondents say they are done and parallel testing



Source: Equifax Poll, October 2018

Data Gaps Pose a Challenge

A key piece of the CELC puzzle centers on data. The new accounting standard may require banks, credit unions and lenders to obtain and maintain a great deal of additional data to satisfy model requirements. Potential data gaps and inaccuracies can pose a big challenge.

Ease of pulling it all together is the greatest data challenge lenders face.

In a subsequent polling question in the Equifax CECL Readiness webinar, we asked attendees to identify their greatest data challenge related to CECL implementation. In the survey:

  • 62% chose Ease of pulling it all together as the greatest data challenge
  • 14% of respondents noted that having enough data was their greatest challenge
  • 11% identified data accuracy as their greatest challenge

 

Source: Equifax Poll, October 2018

Where Do You Stand?

Where does your organization stand with regard to CECL implementation? Are you like the 1% that are done and ready? If not, we can help. Equifax can help you fill your gaps with trade level credit data linked over time for multiple portfolio types dating back to 2005. Contact your account representative or contact us. For more information on CECL, read our other CECL blog posts or view our CECL Readiness webinar.

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