RiskTech Forum

Sageworks: Making the build vs. buy decision

Posted: 6 March 2018  |  Source: Sageworks

Most non-public business entities aren’t required to implement the current expected credit loss (CECL) model until fiscal years starting after Dec. 15, 2020. However, many institutions are heeding the advice of the FASB and have begun transition steps to ensure effective implementation of this major change in estimating losses. The FASB provides direction for which the CECL methodology for estimating allowances for credit losses will be applied. The model will require more inputs, assumptions, analysis and documentation, making the option to automate and modernize the process significantly more attractive than under existing accounting standards for many banks. If banks are considering software to comply with the regulations, they may choose to build their own software solution or work with a third-party vendor. In either case, banks have several considerations to help narrow the playing field.

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