FlexFinance IFRS BRIGHT – the revolutionary, scalable, flexible solution that can be tailored to meet any bank’s unique requirements

Well-known banks around the world already use FERNBACH’s IFRS solution to ensure IFRS-compliant financial accounting and legal reporting. These financial institutions include both smaller and medium-size banks as well as larger retail banks.

As a market leader for IFRS solutions, FERNBACH knows that different banks generally have different requirements for an IFRS solution. Because the scope of services that an IFRS solution has to cover varies greatly from one bank to the next, not every bank needs all the functions that an IFRS solution would have to offer – at least not in the early stages of implementation. Following a number of comprehensive market analyses, the company has developed the right solution to give banks what they need: core functionalities that fit into the learning curves drawn from IFRS implementation projects in countries that adopted IFRS earlier on (see below).

FERNBACH’s new, innovative IFRS BRIGHT approach enables banks to start with an ‘IFRS starter kit’ and to add more functions as becomes necessary. This approach drastically reduces the time to IFRS implementation so that the bank is compliant in approximately three months’ time. The close collaboration with expert local partners makes invaluable contributions to IFRS implementations and helps to overcome the obstacles and challenges of adapting existing software to IFRS reporting.

The Benefit of Successful IFRS Implementation

FlexFinance IFRS BRIGHT is based on the experiences gained by FERNBACH through numerous successful implementation projects.

FlexFinance IFRS BRIGHT is a combination of the tried and tested FlexFinance IFRS solution, which is already live in several banks, with the BRIGHT implementation approach. It is important to note that the BRIGHT implementation approach makes optimal use of the technical, but also of the functional scalability of the FlexFinance solution.

The international partnerships are based on a close cooperation between both FERNBACH and their chosen partners. These partnerships enable FERNBACH to adapt its solutions quickly and efficiently to ever-changing national and international regulatory requirements. Exchanging knowledge with on the ground local consultants about shifts in market conditions plays an invaluable role. For this reason FERNBACH organises regular partner events, trainings and knowledge transfer sessions.

FlexFinance IFRS BRIGHT –
the Answer to the IFRS Implementation Learning Curve

O significado e a motivação por trás do FlexFinance IFRS BRIGHT vem da curva de aprendizado que pode ser vista quando as IFRS são aplicadas a qualquer prática contábil de um país. Esta curva de aprendizado mostra certos padrões de comportamento dos bancos, dos auditores e dos reguladores que será explicado abaixo.

“Keep it Simple, Cheap and Fast” – Getting Started

Immediately following the announcement by regulators that IFRS must now be integrated into banks’ accounting practices, those involved begin by trying to limit implementation of the requirements to the bare essentials. This includes the effective interest rate (EIR), for example.

The subtle details that must be considered when calculating the effective interest rate are initially ‘hidden’. Details like the consideration of ‘prepayment behaviour’, i.e. the differentiation between expected and unexpected payments on the EIR, also tend to remain hidden at this stage.

Cash flow prognosis is another example. IFRS is often the first time many banks are faced with the challenge of predicting their business events’ cash flows for their entire lifecycles. To keep this prognosis as simple as possible, banks apply the last fixed interest rate to all future interest payments for variable interest agreements. In conclusion, the first phase can be described as the one where banks are to ‘keep it simple, cheap and fast’.

As Time Goes on, IFRS Requirements Around the World
are Growing Stricter

As time goes on, banks are realising that IFRS is going to change their accounting practice. Questions like ‘What effect will IFRS have on my balance sheet and my P&L?’ or ‘How can I influence my balance sheet with, or even despite, IFRS?’ are becoming more important. The next step is to think about the extent to which internal accounting practices and controlling have to be adapted to meet IFRS requirements.

The requirements made by auditors and regulators in countries where IFRS has been introduced are also becoming more stringent. The initial interpretation of IFRS, which accommodated financial institutions in their simplified processes, is being replaced by a more detailed and more exact interpretation of the requirements. This stricter approach is leading to a revision of the expectations placed on banks, meaning that accounting now has to be an exact representation of the economical and legal information and that IFRS is to be implemented in its entirety. Arguments like ‘that’s immaterial’ or ‘that’s unreasonable’ no longer have the same effect.

IFRS BRIGHT: A Fast Adapter!

Based on the developments detailed above, FlexFinance IFRS BRIGHT is the right choice:

• The goal of the IFRS BRIGHT solution is to make initial implementation of IFRS as easy as possible for the bank while keeping all options open for the future.
• ‘Easy’ here applies to IFRS knowledge as well as to the functional design. The comprehensive pre-parameterisation based on FERNBACH’s best practice experience in all processing steps dramatically reduces the effort and time needed for implementation.
• Standard software vendors provide simple approaches that lack the ability to support more sophisticated approaches. But FlexFinance is different.
• IFRS BRIGHT combines an enlightened view of requirements with a simple/fast approach. We define simple/fast in relation to what the customer requires of the solution. IFRS BRIGHT can adapt! It offers sophisticated, on-demand methods in a standard solution without additional third party development and intensive pre-processing.
• Whenever a standard setup is not applicable, templates/tools can be used to tailor the solution. Different approaches are available to meet one and the same requirement. Upon request, simple approaches can be replaced by more advanced ones without leading to advanced data requirements. And FlexFinance IFRS can often provide the additional information needed on its own.

A Tailored Solution for Every Bank

FlexFinance has already proven its worth in many banks across the world: It is an extremely powerful and flexible multi-GAAP engine with powerful IFRS valuation and accounting functions. With the standard FERNBACH Implementation Method, we approach the bank with a very open system that can be parametrised to cater to the most complex financial instruments and the most advanced valuation techniques. We can also fully tailor FlexFinance to fit any bank’s specific complex environment. This is the cutting-edge system that runs the world’s leading financial institutions.