Credit reporting agency and risk solutions provider TransUnion is taking steps to help lenders to comply with the new Current Expected Credit Loss (CECL) accounting rule. The company is partnering with operations management and analytics company EXL to facilitate the change.
The partnership will allow TransUnion to create a CECL Credit Loss Calculator to help lenders forecast losses under CECL, since the new guidelines change the methodology used to calculate loan loss allowances. The tool combines EXL’s analytics capabilities with TransUnion’s de-personalized credit data to create a platform that complies with all CECL reporting guidelines, which alter how banks calculate loan loss.
“Many players in the industry are describing CECL as the biggest change to bank accounting standards in years,” said Jason Laky, SVP 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.”
Using the Credit Loss Calculator, lenders can leverage their own portfolio data or automatically import data reported by TransUnion. The tool allows lenders to adjust for macroeconomic scenarios, apply overlays, and adjust the models for different credit products, including mortgages, auto loans, and revolving credit.
Founded in 1968, TransUnion is headquartered in Chicago, Illinois with office locations in Hong Kong, Mumbai, Toronto, Johannesburg, Colombia, and Brazil. At FinovateFall 2016, TransUnion showcased Prama, a suite of analytics tools that helps lenders gain market intelligence and acts on insights to drive growth and build a risk policy. Last month, the company acquired device intelligence firm iovation. TransUnion is a public company with a market capitalization of $13.4 billion, trading on the NYSE under the ticker “TRU.”