TransUnion Partners with EXL to Create Turnkey Current Expected Credit Loss (CECL) Solution
Technology solution will allow lenders to seamlessly comply with new CECL accounting rule
TransUnion (NYSE: TRU) announced today it is partnering with global technology and analytics company EXL (NASDAQ: EXLS) to create a seamless technology solution for lenders to comply with the new Current Expected Credit Loss (CECL) accounting rule. Information about the new accounting rule will be highlighted during TransUnion’s webinar, “Major Hurdles to Overcome to be CECL-Ready,” scheduled for 1 p.m. CDT on August 15.
Through the partnership with EXL, TransUnion is creating TransUnion’s CECL Credit Loss CalculatorSM to provide lenders with a turnkey solution to calculate loss forecasts in compliance with CECL. The product combines the breadth and depth of depersonalized TransUnion credit data with the accounting expertise and analytics capabilities of EXL, resulting in an intuitive, easy-to-use platform that adheres to all estimation and reporting guidelines on CECL.
Issued by the Financial Accounting Standards Board (FASB), CECL will change the methodology used by financial institutions in calculating the allowance for loan losses. The rule is applicable to all lenders and goes into effect in 2020 for SEC filers and 2021 for non-SEC filers. CECL introduces a “forward looking” approach, requiring financial institutions to consider future conditions that may affect estimations of credit losses, in addition to past and current events.
“Many players in the industry are describing CECL as the biggest change to bank accounting standards in years,” said Jason Laky, senior vice president and consumer lending business leader at TransUnion. “While large banks have more resources at their disposal to adapt, we believe the majority of small to mid-sized lenders will not have the ability or capacity to comply internally and may face challenges as they prepare for the rollout of this new rule.”
The CECL accounting rule will also incorporate estimations of the expected credit losses over the lifetime of the credit product and streamlines the current practice of multiple impairment models into one single model. Implementation will introduce several key accounting modifications that require significantly more data and a deeper level of modeling, analysis and reporting.
The combined TransUnion and EXL solution allows lenders to use their own portfolio data, or automatically import TransUnion-reported data, and adjust for macroeconomic scenarios through a series of customizable models. Based on business expectations, lenders may apply overlays and adjust the models across all credit products, including personal loans, auto loans, HELOCs and mortgages as well as revolving credit products such as credit cards.
“The compliance nature of CECL brings pressure to lenders to have a CECL-ready plan in advance of the rule’s effective date,” said Ankor Rai, SVP and Global Co-Head of EXL Analytics. “We are pleased to partner with TransUnion to deliver a cutting-edge technology solution that will meet the needs of a variety of lenders as they prepare for the unique challenges associated with CECL.”
Please click here to register for TransUnion’s August 15 CECL webinar.
TransUnion is a leading global risk and information solutions provider to businesses and consumers. The company provides consumer reports, risk scores, analytical services and decisioning capabilities to businesses. Businesses embed its solutions into their process workflows to acquire new customers, assess consumer ability to pay for services, identify cross-selling opportunities, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud. Consumers use its solutions to view their credit profiles and access analytical tools that help them understand and manage their personal information and take precautions against identity theft. www.transunion.com
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EXL (NASDAQ:EXLS) is a leading operations management and analytics company that designs and enables agile, customer-centric operating models to help clients improve their revenue growth and profitability. Our delivery model provides market-leading business outcomes using EXL's proprietary Business EXLerator Framework®, cutting-edge analytics, digital transformation and domain expertise. At EXL, we look deeper to help companies improve global operations, enhance data-driven insights, increase customer satisfaction, and manage risk and compliance. EXL serves the insurance, healthcare, banking and financial services, utilities, travel, transportation and logistics industries. Headquartered in New York, New York, EXL has more than 28,000 professionals in locations throughout the United States, Europe, Asia, Colombia, Australia and South Africa. www.exlservice.com