Equifax, the global data, analytics, and technology company, is teaming up with Wolters Kluwer’s finance, risk and reporting (FRR) business, are teaming up to provide an end-to-end current expected credit losses (CECL) solution.

The companies are combining their respective CECL offerings and capabilities to help financial institutions comply with new standards instituted by the Financial Accounting Standards Board (FASB) for “a complete solution that ensures an integrated and supportable framework.”

The new CECL standards will take effect from Q1 2020 for financial institutions registered with the US Securities and Exchange Commission (SEC), and from Q1 2021 for financial institutions not registered with the SEC.

The OneSumX CECL solution leverages Wolters Kluwer’s integrated finance, risk and reporting platform enabling compliance with CECL requirements from data management and governance to credit risk models, expected credit loss calculations, accounting and disclosures.

OneSumX CECL will now house Equifax’s SmartReserve models, leveraging its state-of-the-art accounting framework with Wolters Kluwer’s regulatory update service (RUS) to apply and maintain all required allowance accounting, producing all FASB mandated disclosures.

SmartReserve helps SEC-registered financial institutions comply with CECL requirements by obtaining the necessary historical loan performance data and insights for compliance with the standard. The models within SmartReserve use robust historical data, producing a reliable life of loan loss estimates.

“All firms impacted by CECL need to ensure they are firmly on the road to compliance,” said Todd Lawrence, general manager of Wolters Kluwer FRR Americas. “Equifax brings credit content and methodologies to this exciting partnership which draws on our award-winning OneSumX suite of technology solutions and deep-rooted expertise in integrated finance, risk and reporting.

“The combined offering uniquely facilitates a successful CECL process in the eyes of regulators, auditors and boards of directors.”

“This is new territory for many lenders as they may not have the infrastructure to support these large amounts of data, and mid-tier and smaller banks and credit unions and lenders may not have  the capacity to perform the modelling in-house,” said Amy Graybill, vice-president, enterprise insights and core data products, Equifax.

“Our SmartReserve provides the assistance lenders need to help protect their business against non-compliance with new CECL standards, along with historical pre and post-recession data that is needed to accurately forecast future credit losses and calculate required reserves.”