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NTT Data’s Innovative ECL Master Solution

NTT Data Luive Co., Ltd., based in Chiyoda, Tokyo, has launched a precursor initiative to develop a new solution tentatively named "ECL Master." This project aims to assist financial institutions in adapting to the upcoming accounting standards published by the Accounting Standards Board of Japan (ASBJ) related to expected credit loss (ECL) calculations. As part of this plan, NTT Data has embarked on a collaborative project involving several clients facing challenges in developing ECL operational frameworks, aiming for a standardization of workflows with the help of accounting consultants. This solution is designed to alleviate the burdens placed on financial institutions due to the increasing complexity of their operations amid regulatory changes.

Background

In alignment with international accounting standards under IFRS 9, the ASBJ is transitioning towards an ECL-based impairment model for financial assets in Japan. This initiative encompasses a variety of items, including loans, bonds, financial guarantees, and commitment contracts. Financial institutions are now required to manage intricate data processing, specifically regarding amortized cost accounting, Significant Increase in Credit Risk (SICR) assessment, and ECL determination using projected Probability of Default (PD) and Loss Given Default (LGD). Leveraging the expertise and accomplishments from their established Master series of financial solutions, NTT Data aims to meet the evolving needs of clients in reaction to accounting regulation changes by providing this new service.

Features of ECL Master

Standardized Business Processes Tailored to Local Practices

ECL Master encompasses all the functionalities required by the new accounting standards, including amortized cost calculation, SICR assessments, and ECL determinations. Moreover, it centralizes related business processes effectively. In collaboration with Credit Pricing Corp., a specialist in financial risk management, NTT Data ensures comprehensive support from consulting to system implementation.

Optimized Package Structure for Cost Efficiency

By maximizing the use of NTT Data's existing product assets while focusing exclusively on functionalities needed under local standards, they aim to minimize the scope of new development. This strategic approach is expected to reduce the implementation burden and overall costs for their clients, making the transition smoother and more manageable.

Promoting Future Secondary Use of Aggregated Data

ECL Master will consolidate transaction and client data used for ECL assessment, establishing a foundational dataset for end-of-period calculations. This data can then serve as a resource for calculating management indicators or responding to additional regulatory requirements, enhancing its utility for financial institutions.

Future Developments

NTT Data is actively conducting workshops focused on standardizing workflows beyond just IT systems, in collaboration with multiple clients currently evaluating ECL process structuring. The finalization of the ASBJ’s accounting standards will further inform the ECL Master development, with the goal of launching the service by fiscal year 2027.

The Master series offers a suite of solutions aimed at facilitating efficient adherence to regulatory changes encountered by financial institutions.

Credit Pricing Corp. provides advanced analytical services in financial engineering, underpinning decision-making with precise data and expertise.

Note: "ECL Master" is a trademark application currently in progress by NTT Data Luive Co., Ltd.

For further inquiries concerning this project, please contact:
Public Relations: NTT Data Luive Co., Ltd., Corporate Strategy Division, Engagement Promotion Department, PR Group
Contact: Kawakami
Phone: 044-223-4911

Product & Service Inquiries: NTT Data Luive Co., Ltd., Financial Solutions Business Division, BX Sales Planning Office
Contacts: Tokuda, Izumi, Kawaguchi
Phone: 050-3659-8610