TransUnion Partners with EXL to Create Turnkey Current Expected Credit Loss (CECL) Solution

Technology solution will allow lenders to seamlessly comply with new CECL accounting rule

TransUnion (NYSE: TRU) has announced it is partnering with global technology and analytics company EXL (NASDAQ: EXLS) to create a seamless technology solution for lenders to comply with the new Current Expected Credit Loss (CECL) accounting rule.

Through the partnership with EXL, TransUnion is creating TransUnion’s CECL Credit Loss CalculatorSM to provide lenders with a turnkey solution to calculate loss forecasts in compliance with CECL. The product combines the breadth and depth of depersonalized TransUnion credit data with the accounting expertise and analytics capabilities of EXL, resulting in an intuitive, easy-to-use platform that adheres to all estimation and reporting guidelines on CECL.

Issued by the Financial Accounting Standards Board (FASB), CECL will change the methodology used by financial institutions in calculating the allowance for loan losses. The rule is applicable to all lenders and goes into effect in 2020 for SEC filers and 2021 for non-SEC filers. CECL introduces a “forward looking” approach, requiring financial institutions to consider future conditions that may affect estimations of credit losses, in addition to past and current events.

The CECL accounting rule will also incorporate estimations of the expected credit losses over the lifetime of the credit product and streamlines the current practice of multiple impairment models into one single model. Implementation will introduce several key accounting modifications that require significantly more data and a deeper level of modeling, analysis and reporting.

The combined TransUnion and EXL solution allows lenders to use their own portfolio data, or automatically import TransUnion-reported data, and adjust for macroeconomic scenarios through a series of customizable models. Based on business expectations, lenders may apply overlays and adjust the models across all credit products, including personal loans, auto loans, HELOCs and mortgages as well as revolving credit products such as credit cards.