By now, you’re probably wondering what to do about CECL. Although it’s been delayed, the fact is that CECL is still happening. In our educated opinion, now is the time to start finalizing CECL plans.
Here are four reasons why we believe financial institutions shouldn’t wait to implement CECL.
- You need history
You’ll need several years of history in order for your solution to be effective. If you wait too long to choose a system, purchase a system, implement a system, and use the system, it may be too late to actually aggregate an acceptable amount of history to support your CECL results.
- It takes time to get used to a new system
Have you ever adopted new technology before? That’s a trick question – we all have. Regardless of what kind of software it is, there’s a learning curve, even if it’s small. Our CECL solution is about as easy as it gets, but it’s nice to have time to thoroughly understand how it works. That’s why we recommend finding the right solution for you now instead of waiting.
- It can improve risk management
CECL is meant to help financial institutions better understand the products they are putting on the books and be able to price them better, which are all positive benefits for strategic risk.
- Regulators expect it
Examiners have said they expect banks and credit unions to run parallel calculations up to a year prior to their actual implementation date. Plansmith’s CECL solution allows for both the CECL calculation as well as the current Incurred Loss method, so you can start running parallel calculations today.