Technology Solutions for CECL and IFRS 9

Sidhartha Dash


IFRS 9 and CECL herald a fundamental shift in the impact and incidence of accounting regulations on banks’ technology and process environments, largely because both standards affect the core business and operations of banking. This chapter focuses on the broad shifts in technology that have been caused specifically by IFRS 9 and CECL but also more generally by a drift to a more risk-aware approach to accounting. The move towards risk-aware accounting requires an accompanying response from banks in the form of new technology architecture, data-management frameworks and computational tools (such as computing languages and algorithmic and data structure abstractions).

While historical shifts in accounting standards – such as hedge accounting or even credit valuation adjustment (CVA) calculations – have had significant consequences for specific technological components within banks, the impacts of IFRS 9 and CECL are more fundamental and far-reaching. Many banks have had to transform their IT systems and technology to address CECL and IFRS 9; most have faced some kind of adaptation. The changes have also forced them to enhance their credit risk systems –

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