Temenos Regulatory Compliance

International Financial Reporting Standard (IFRS9)

The IFRS9 standard became effective since 2018 as a replacement of the previous IAS39 standard following the financial crisis of 2008. The IAS39 incurred loss model was criticised for being ‘too little too late’ and the IFRS9 expected credit loss seeks to address that as it helps banks identifying and mitigating credit risk early.

Why Temenos IFRS9?

The IFRS Solution provides GAAP (Generally Accepted Accounting Principles) platform to support the changing financial regulatory standards related to Banks which includes:

  • IAS39 ( Financial Instrument Recognition & Measurement)
  • Adoption of IFRS9 or Transition from IAS39 to IFRS9(Financial Instruments)
  • Provides the framework for Convergence to IFRS, e.g.FASB91 for US
  • Multi-GAAP Accounting and Multiple Provisioning methods

It provides a seamless transition from IAS39 to IFRS9 or new IFRS9 implementation through configuration. It leverages on the fully integrated architecture of the Temenos core banking, cash flow engine, rules based staging process, risk-modelling engine, and automated data flow to ensure integrity, efficiency and consistency. to support the 3 main focus areas:

  • Classification and measurement of financial instruments
  • IFRS Staging and Impairment and Standard Provisioning under multiple GAAPs
  • A framework for Hedge Accounting
Computer technology

Classification & Measurement

IFRS9 classification and measurement based on bank’s business model:

– Amortised Cost (AMC)
– Fair Value through Other Comprehensive Income(FVOCI)
– Fair Value Through Profit or Loss (FVPL)

Parameter driven accounting methods and accounting schema.

Cash flow engine integrated with the core banking applications with continuous update of the projected cash flow information through-out the life cycle of the loan

Calculation of EIR and revenue recognition

(*within Temenos products)

Woman looking at analytics

Impairment of Financial Assets

A new centralized impairment calculator within the system to move towards the Expected Loss Model and do the necessary Impairment Accounting:

– Uses the 3 Stages model based on Expected credit loss approach
– 12mth ECL, Point in Time ECL or Lifetime ECL
– Extended scope for impairment on financial instruments such as undrawn commitment and financial guarantees.
– Supports Collective as well as Individual assessment
– ECL as initial recognition.
– IFRS staging for risk deterioration using rules based engine for stage determination and option for manual reassignment
– Credit measures using Integrated PD/LGD modelling or from external source
– Multiple methods for allowance and provision calculation

Hedge Accounting Framework

The Hedge Accounting framework provides the ability to trigger the hedge accounting based on hedge effectiveness results fed from an external source.

The Hedge Accounting solution offers the following capability:

– To state the Hedge types
– To document the Hedge Relationships
– To define the Accounting Rules based on the Hedge types
– To post the Hedge Accounting Entries

Multiple-GAAP Accounting Platform

Provides the framework to support different GAAP accounting

Supports FASB91 for the recognition of fees and cost under US GAAP throughout the life-cycle of a loan.

Product Overview

Fully integrated end to end solution

The fully integrated architecture with our risk PD/LGD modelling permits consistent data flow and integrity without the nightmare having to incorporate of forward-looking timely Macroeconomic data or to build modelling capabilities that take into systemic factors

– Ensures data integrity and consistency
– Reduces inefficiencies and costs associated with manual processes

Component based implementation

Modular approach provides option to choose required functionality

Parameter Driven approach

Our parameter driven configuration of the accounting methods and accounting schema to satisfy the regulatory requirements (IAS39, IFRS9 or FASB91)

Our rules based staging process provide the capability for Banks to apply their own criteria to assess their assets and customers.

Ensures flexibility and adaptability to changing regulatory requirements

Multi-GAAP platform

Our Multi-GAAP platform enables multiple accounting treatments and provisioning methods with different views of the same balance sheet based on the required GAAP

White Paper and Report

Forrester Deals Survey 2021

The Forrester survey recognizes Temenos as the only Global Power Seller with a 20% increase in new named deals. This is the 15th time that Temenos has achieved Global Power Seller status.

Explaining Explainable AI in Financial Crime Mitigation

According to a global survey conducted by the Economist Intelligence Unit (EIU) on behalf of Temenos, two-thirds of banking executives believe that new technologies such as AI, machine learning will continue to have the greatest impact on the global banking sector in the next five years. AI can deliver huge benefits in financial services, particularly in the area of combatting financial crime and assisting with alert evaluation where it can deliver a significant return on investment. In acknowledgment of this, regulators are encouraging innovation, including harnessing new technologies, however, with caution that decisions need to be explainable and auditable. Join Professor in AI Hani Hagras, and Adam Gable in this session to learn why there does not need to be a trade-off between the accuracy of predictions and the ability to explain them. Find out how you can use Temenos Financial Crime Mitigation as a “plug in” service to offer real-time fraud, AML and sanctions screening to your payment and product offerings, helping you to better protect your organization in the digital age and reduce timely and costly overheads, powered by Temenos’ industry-leading Explainable AI platform.

Key Challenges and Opportunities of ISO 20022

Over the coming years, some of the key payments rails in North America will undergo radical transformations to ISO 20022 based standards and transaction services. Affecting both domestic and cross border flows, these changes will impact many areas of processing, from payment order intake to transaction orchestration and execution, to clearing and settlement, to customer reporting, etc. In this discussion, we will highlight some of the key challenges and opportunities to be addressed based on learnings and insights gained from other markets around the world where similar transformations have taken place. What are the key capabilities required to address these challenges and thus reduce the risks and impact on your business?