By Zack Li, Managing Director, PNC
Could you please tell our readers a little bit about yourself, your experience and what your current professional focus is?
I have been working in the financial industry for about 15 years. Currently I am working in the Asset and Liability Management team in the CIO-Treasury at PNC Bank. My experience has been focusing on quantitative research and modelling in various areas such as fixed-income portfolio risk management, derivatives pricing, mortgage servicing rights (MSR), annual CCAR stress tests, and CECL project. I am currently working on the CECL project with focus on CECL economic scenarios and implementation, which is the front part of the CECL process. We work very closely with our Credit modelling team for CECL implementation.
What, for you, are the benefits of attending a conference like the CECL Congress and what can attendees expect to learn from your session?
Attending the CECL Congress is beneficial for participants to know various key topics in the CECL implementation. In addition, participants can learn experiences from peers. The networking opportunity is also very helpful to discuss interesting issues and exchange ideas. I would like to share my experience in the CECL scenario design and implementation, CECL impact analysis jointly with our Credit modelling team, and CECL production implementation.
You will be discussing the implementation process, can you provide financial institutions with any tips for the final implementation?
First of all, the senior management needs to set top priority for the final CECL implementation.
Second, weekly meeting for project tracking is needed. Designated project managers are needed to ensure projects in good progress.
Third, regularly meeting for a cross functional team with experts from each area is recommended to discuss key issues and find resolutions.
You will also be covering the challenges on executing large scale projects in complex institutions, what are some of the best ways financial institutions can overcome this?
It is very challenging to execute large scale projects in large institutions. The best way I think is to have a committee with experts from each area to meet regularly. Luckily, CECL implementation is similar to the CCAR execution in certain degree. The experiences in the CCAR process can be leveraged for the CECL implementation.
How do you see CECL impacting the financial risk landscape over the next 6-12 months?
It is not clear how the financial risk landscape will change in the next 6-12 months. The financial industry is still figuring out many issues related to the CECL implementation. In addition, the CECL impact on the business lending is not clear yet. But I think the industry will sort out the CECL impact on the business lending once the CECL implementation is near completion. One downturn may be needed to see the impact of CECL.
How does CECL implementation differ for large FIs vs small FIs? What needs to be considered?
Large FIs may already have built the infrastructure for CCAR process, which can be leveraged for the CECL implementation. Small FIs may have to build the new infrastructure and acquire data for the CECL projects. I would recommend that Third-party vendor’s model and system can be leveraged for the CECL implementation for small FIs.