Informatica Perspectives

Back in June 2009, the Financial Accounting Standards Board (FASB) published Financial Accounting Statements No. 166, Accounting for Transfers of Financial Assets, and No. 167, Amendments to FASB Interpretation No. 46(R), which changes the way entities account for securitizations and special-purpose entities. The new standards will impact financial institution balance sheets beginning in 2010 and will require substantive changes to how banks account for many items, including securitized assets that had been previously excluded from these organizations' balance sheets. Banks affected by the new accounting standards will be subject to higher risk-based regulatory capital requirements. So what does it all mean and how much will it cost banks to comply? 

According to industry experts, the pain for the banks will be significant, to the tune of half a trillion dollars with the usual suspects expected to take the bulk of the hit: Citibank at $154 billion, followed by Bank of America $121 billion, JP Morgan Chase $100 billion and Wells Fargo Bank at $48 billion. No one has called out exactly how this will translate across the enterprise and what investments they will need to make, however one can predict that the cost of compliance will be even higher for those who lack capable data integration and data quality technology.

Some banks will take this opportunity to replace old accounting systems with more modern technology requiring successful data migration of existing data from the old systems.  Others will modify existing data warehouses to access the data needed from legacy transaction systems which are difficult to access and corrupt with data quality issues.  In addition with the growing adoption of outsourcing business applications and mountains of critical business information stored away in unstructured files including .PDF and spreadsheets, managing and accessing data in today’s enterprise more complex than ever before.  Therefore, banking organizations making IT investments to address these new requirements should take this time to evaluate their data integration and data quality needs to access, transform, cleanse, and deliver the data regardless of source, format, structure, or latency to the applications and compliance professionals who require it. Those who attempt to hand code critical data integration and quality processes or used unproven tools will be exposed to increased fines and penalties which in today’s market, no one can afford.