Considering the January 2023 CECL deadline, many financial institutions created their own SCALE or WARM CECL models due to perceived cost savings, simplistic modeling, and reduced time investment—only to find that their in-house solution led to more questions and costs than anticipated.
If your institution is considering third-party CECL vendor solutions, this checklist can help you select a vendor that fits your needs.
✅ Confirm there is a SOC in place. How frequently is it performed? Who performs it?
✅ Determine whether the provider has experience with public institutions that have adopted the CECL standard.
✅ Ensure the provider has CPAs/CFAs/PhDs on staff and has a track record of successful CECL implementations.
✅ Assess how and when management will provide input for adjustments to forecasts, qualitative components, or individually analyzed (e.g., impaired) loans.
✅ Ensure that the model contains appropriate reporting, including external GAAP and call reporting, and collects meaningful peer data that match your institution’s needs.
✅ Look for an end-to-end solution that will allow you to perform CECL calculations in one platform.
✅Understand the total cost upfront and ensure that it fits your financial institution’s budget. Note licensing vs. services so that you are comparing apples to apples.
✅ Ask for an implementation timeline example that displays implementation details clearly and concisely.
✅ Estimate an implementation date that fits your institution’s deadlines. Many banks are adopting CECL simultaneously, so make sure you are not last in the queue.
