Preparing the institution and increasing internal communication to ensure BAU readiness across teams

Preparing the institution and increasing internal communication to ensure BAU readiness across teams

samantha cunningham2
1. Samantha, can you tell the Center for Financial Professionals about yourself and your experience in the IFRS 9 field?

I have 26 years’ experience in Banking at RBS and AIB, spread across a number of diverse disciplines and I am a qualified chartered accountant and banker. My last role was as a Senior Credit Underwriter, and I commenced in my role as the Head of Policy for AIB IFRS Project in December 2015, so literally have been involved in the project for exactly a year.

My main role is ensuring that AIB is fully compliant with the requirements of the IFRS 9 Accounting Standard, but through this role I have been heavily involved with all streams of the programme, especially BAU communication.

2. What are the most important factors to consider when getting businesses up to speed?

The first key message is that this is an accounting standard that will have a fundamental impact on their business and their day to day credit management practices. There is a tendency in the front-line business to think “It’s an accounting policy – leave that to Finance” !

The second message is 1st of January 2018 – whilst it sounds like a log time away – in reality is not and that businesses need to be prepared, and given the standard is retrospective, then actions taken by the business today can have impacts in the future, therefore any strategic decision in the credit risk world taken today, should be taken understanding the impact of IFRS 9 introduction.

3. Why is it important for banks to interpret the models and feed the information back through the banks to ensure BAU readiness?

It is important because the impacts will have an impact on product pricing and also product structuring. This needs to be understood by the front- line business so that they can adapt accordingly. Ultimately the impact of the introduction will have an impact of the profit and loss of individual front line business stream, which in turn will have an impact on customers. The front- line needs the management information regarding the financial impacts as early as possible, both to manage the transition but the long-term impacts on the business and their customers.

4. What are the consequences if banks do not involve BAU teams in parallel runs?

This is an excellent question. The consequences is that the theoretical solutions may not be fit for purpose in the front-line. In providing implementation solutions the programme should be looking to both “Keep it Simple” but also be aware of how it fits with other business , finance and credit management practices. Without the input and involvement of the front- line business it is not possible to guarantee that the end to end process will run smoothly at go- live date.

5. What are some of the challenges which banks could face post the implementation in 2018?

I really wish I knew the answer to that question, because if I knew the challenges I could plan today to address them – the smart answer to this question is ask me in 13 months’ time!

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