In just one year, Indonesia’s adaptation of International Financial Reporting Standard 9 (IFRS 9), known as PSAK 71: Instrumen Keuangan, will officially go into effect, requiring a significant accounting change that will affect operations, financial planning, and portfolio strategy at banks across the nation. Bank Rakyat Indonesia (BRI), the largest bank in Indonesia and a top 10 Association of Southeast Asian Nations (Asean) bank for tier 1 capital, is using SAS Expected Credit Loss to make that deadline.
Working with SAS’ technology services partner Nexia Indonesia, SAS is helping BRI reduce its IFRS/PSAK 71 implementation risk and ensure long-term flexibility to meet evolving regulations.
Financial Instruments is an International Financial Reporting Standard (IFRS 9) that arose in the wake of the global financial crisis. Intended to address weaknesses in the current IAS 39 standard, it includes a more forward-looking view of expected losses and how they are recognized on balance sheets.
With the IFRS 9/PSAK 71 implementation deadline in Indonesia set for January 2020, financial institutions need to act fast in their convergence of functions, technology, and models. The updated standard on credit loss measurement drastically changes how financial institutions estimate, reserve, and report on losses. To meet the compliance requirements, banks must analyze large volumes of data efficiently and tailor approaches to deploying risk management solutions across their organizations.
After a highly stringent process, BRI selected analytics’ company SAS to help the bank meet regulatory changes across its 12 business segments. SAS’ solution has the full suite of capabilities to meet changing accounting requirements while helping BRI converge its risk and finance functions. BRI will use SAS Expected Credit Loss to ensure fast, efficient risk model implementation as well as for testing and maintenance efforts after the IFRS 9/PSAK 71 implementation deadline in Indonesia.
SAS Expected Credit Loss is the preferred platform for transparent, fast and efficient credit loss modeling for IFRS 9 compliance among top-tier banks. With 100 deployments globally since 2014, SAS has helped a growing number of banks in Asean achieve operational readiness to meet the new accounting standards. Most recently, British multinational Standard Chartered Bank — present in all 10 Asean markets — was awarded The Asian Banker Risk Management Award for the implementation of an IFRS 9 solution, for which they used SAS Expected Credit Loss.
“IFRS 9 brings with it complex computational challenges and banks need a partner that can help them scale to meet these demands efficiently,” said Sheldon Goh, regional head of Risk Solutions for SAS in Asean markets. “With significant traction in the region, SAS is well-positioned to help banks in emerging markets, such as Indonesia and Philippines, ensure effective and timely IFRS 9 implementations. We will support BRI with a centralized, high-performance analytics platform to address IFRS 9/PSAK 71 and other changing requirements in the financial services sector.”
As the largest bank in Indonesia, BRI is backed by a customer base of more than 50 million, supported by modern facilities and comprehensive savings and loan products, from microfinancing to corporate. BRIsat, BRI’s satellite covering Indonesia and Southeast Asia, connects over 10,000 BRI operating units to meet customer banking needs across the region.
Image from BRI website.