# Lack of collaboration and skills shortage is limiting organisations’ ability to meet IFRS 9 requirements
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2016-10-15
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Overcoming IFRS 9 Implementation Challenges with
Meta Description: Discover how Jaywing's Horizon software solution helps lenders tackle IFRS 9 requirements with ease and confidence. Learn more today!
URL: https://financedigest.com/lack-of-collaboration-and-skills-shortage-is-limiting-organisations-ability-to-meet-ifrs-9-requirementshtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/810-6963-389-1736844444446-compressed.jpg)

- _Lack of collaboration between teams working on IFRS 9 requirements and skills gap are cited as the biggest challenges to implementing new legislation_
- _Jaywing’s software solution Horizon, enables_ lenders to quickly and cost-effectively _produce IFRS 9 provisions, while supporting stress testing and ICAAP processes_

Risk analytics consultancy Jaywing’s new [IFRS 9 Confidence Report](https://risk.jaywing.com/resources/the-ifrs-9-confidence-report/) reveals that nearly half of lenders (49 per cent) believe an integrated approach is key to helping them meet IFRS 9 requirements.

The deadlines to meet IFRS 9 requirements begin in January 2018. However, it’s recommended that [models are developed](https://www.financedigest.com/research-and-technological-innovations-to-bolster-developments-in-animal-model-market.html "Research and Technological Innovations to Bolster Developments in Animal Model Market"), validated, implemented and tested by the end of 2016. This is to [allow lenders time](https://www.financedigest.com/allowing-yourself-time-to-grow-as-a-leader-consciously-will-enable-you-to-support-your-team-authentically.html "Allowing yourself time to grow as a leader, consciously, will enable you to support your team authentically") to perform the necessary corroboration of the provision figures under IFRS 9, by running them in parallel for a period alongside the current IAS 39 provisions.

**Challenges to implementing solutions**

While an integrated approach to IFRS 9 is key, more than half of organisations (56 per cent) believe the biggest challenge to building IFRS 9 models is the availability of analytical expertise. This was [closely followed](https://www.financedigest.com/why-google-is-never-closed-for-maintenance-and-how-banks-can-follow-suit.html "Why Google is never closed for maintenance and how banks can follow suit") by the availability of quality data and infrastructure (55 per cent) and timescales associated with developing a compliant solution (50 per cent).

This lack of time and expertise has resulted in four in five organisations recognising a need for outside help, either through the use of outsourced consultancy or using external [software solutions](https://www.financedigest.com/healthcare-software-solutions-to-ride-the-pneumatic-compression-therapy-market.html "Healthcare Software Solutions to ride the Pneumatic Compression Therapy Market"), with only one in five businesses (20 per cent) planning to go it alone. Jaywing is already working with eleven lenders in a consultancy capacity and has recently launched an IFRS 9 [software solution](https://www.financedigest.com/why-no-code-beats-custom-software-and-turnkey-solutions-for-business-automation.html "Why no-code beats custom software and turnkey solutions for business automation"), Horizon. Horizon uses machine learning from Jaywing’s extensive [banking regulation](https://www.financedigest.com/be-simple-in-bank-capital-bank-of-england-tells-global-regulators.html "Be simple in bank capital, Bank of England tells global regulators") expertise to deal with all aspects of IFRS 9 impairment modelling. It uses feeds of a lenders’ own data and macro-economic data and its [model engine](https://www.financedigest.com/mercedes-benz-launches-e-class-its-last-new-combustion-engine-model.html "Mercedes-Benz launches E-Class, its last new combustion engine model") combines Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD) components to calculate life time Expected Credit Losses (ECL).

**Confidence by Sector**

The [report revealed that banks](https://www.financedigest.com/credit-suisse-shares-hit-record-low-after-report-bank-is-looking-to-raise-cash.html "Credit Suisse shares hit record low after report bank is looking to raise cash") are taking the lead in their preparedness for IFRS 9 with almost a half of banks (49 per cent) already in the implementation and testing phase. This puts banks firmly ahead of other sectors, with only a third of consumer credit companies (33 per cent) and auto [finance businesses](https://www.financedigest.com/business-finance-the-fintech-evolution.html "Business finance: the fintech evolution") (29 per cent) testing at this time, with just 11 weeks to go before the year end. Building societies were found to be the least prepared for IFRS 9 with less than three in 10 (27 per cent) in the testing phase, with the majority of building societies still designing and planning their solution.

“While some lenders are feeling confident about their progress towards IFRS 9, others say they are struggling,” **said Ben O’Brien, [Managing Director](https://www.financedigest.com/tmwi-appoints-steve-hadfield-as-managing-director-as-the-agency-readies-itself-for-further-growth.html "tmwi appoints Steve Hadfield as Managing Director as the agency readies itself for further growth") at Jaywing**. “The best [way for lenders](https://www.financedigest.com/5-ways-lenders-can-attract-the-younger-generations.html "5 Ways Lenders Can Attract The Younger Generations") to improve their situation is to learn from what’s working with other organisations. That is why tools like [automated modelling software](https://www.financedigest.com/guide-to-the-most-affordable-marketing-automation-software.html "Guide To The Most Affordable Marketing Automation Software") are so beneficial. You can quickly and easily adopt advanced models without significantly [impacting on business](https://www.financedigest.com/how-technology-consultants-impact-business-growth.html "How Technology Consultants Impact Business Growth") as usual.”

**Confidence by job function**

The [research found that different job functions are viewing](https://www.financedigest.com/gamers-spend-twice-as-long-viewing-intrinsic-in-game-ads-compared-to-other-digital-channels-reveals-new-research-from-lumen-and-anzu.html "Gamers Spend Twice As Long Viewing Intrinsic In-Game Ads Compared To Other Digital Channels, Reveals New Research From Lumen and Anzu") their organisation’s preparedness for IFRS 9 in isolation of other departments, and without full visibility of the overall picture. Over a third of economic teams (36 per cent) expect their organisation to complete their parallel runs before the end of the year, however the majority of compliance (33 per cent) and [finance teams](https://www.financedigest.com/finance-teams-using-ai-outperform-peers-as-demand-for-skills-grows.html "Finance Teams Using AI Outperform Peers as Demand for Skills Grows") (43 per cent) don’t think their organisation’s will be ready to parallel run until Q2 2017, with IT departments (31 per cent) even later at Q3 2017.

This demonstrates a clear [disconnect between individual teams and when they expect](https://www.financedigest.com/portugal-expects-deal-to-disconnect-power-prices-from-gas-prices-very-soon.html "Portugal expects deal to disconnect power prices from gas prices ‘very soon’") to complete a parallel run, contributing to a divide between job functions and indicating an overall lack of collaboration. As a result, [nearly half](https://www.financedigest.com/meta-to-take-nearly-half-of-sales-made-by-its-metaverse-creators-as-fees.html "Meta to take nearly half of sales made by its metaverse creators as fees") of those surveyed (47 per cent) agreed that they would use IFRS 9 compliance as an opportunity to improve the infrastructure within their businesses.

O’Brien concluded, “What we’re seeing is that lenders believe an integrated [approach and collaboration](https://www.financedigest.com/the-importance-of-a-proactive-and-collaborative-approach-to-reducing-contactless-fraud.html "THE IMPORTANCE OF A PROACTIVE AND COLLABORATIVE APPROACH TO REDUCING CONTACTLESS FRAUD") between teams is key to success. While significant strides have been made in collaboration, it appears that too often, individual departments are still taking a modular view to task completion in IFRS 9. As well as harmonising the models, the parallel run phase should create greater alignment of IFRS 9 requirements across internal divisions, in support of the organisation’s overarching goals.”

**To access the full complimentary report, visit:** [**https://goo.gl/VById5**](https://goo.gl/VById5)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---