SS&C Technologies Holdings released a study that revealed a disconnect among the banking sector’s readiness for current expected credit loss.

According to the survey, 85% of respondents, which included accounting professionals within financial institutions, expressed being confident or somewhat confident in the ability of their existing reserving process to address the CECL transition.

However, 47% of respondents cited managing a massive amount of data as their top concern. The survey also found that for many respondents, the current reserving process is still comprised of inefficient spreadsheets and manual processes. When preparing for CECL, financial institutions can take advantage of the benefits of an integrated technology platform – automated processes and integrated reporting and analytics.

Under the new accounting standard, financial institutions will be required to consider reasonable and supportable forecasts into a forward-looking credit loss estimate, rather than relying on past events and current conditions. The survey found that 83% of bankers believe CECL will have a substantial impact on policies, procedures and technology, or could even be the biggest change to bank accounting ever.

The current reserving process for many banks is cumbersome and outdated. Banks are often unaware of the benefits technology can provide in facilitating the current process as well as the transition to CECL. For example, nearly half (47%) of respondents ranked managing an overwhelming amount of data as their biggest obstacle. However, only 16% plan to upgrade their technology to help with the heavy lifting and just 12% have existing end-to-end technology solutions in place.

“While much has been written to help banks understand CECL from a policy perspective, little attention has been paid to help institutions prepare for the operational impacts of CECL adoption. This study sheds light on some of the gaps,” said John Lankenau, senior vice president of Product and Operations at SS&C Primatics. “The changing landscape gives banks a chance to get it right from the start. Best practices leveraging technology-enabled automation, and integrated risk and finance results can help banking professionals get the job done efficiently, while delivering cost savings over the long term.”

The survey also found that 39% of respondents listed spreadsheets as the top tool for current US GAAP reserving processes.

The effective date for transition to CECL is 2020 for SEC-registrants and 2021 for others. Because CECL will entail cross-functional changes to the end-to-end reserving process for financial assets measured at amortized cost, it is not too early to get started on a transition plan. In fact, 45% of banks polled have already begun preparing for CECL implementation and another quarter of respondents plan to begin before the end of this year.

The burden of the transition will fall on current teams. Half of banks will train existing staff, which will be responsible for transitioning to CECL as well as the regular accounting close cycle. While another 23% also plan to work with existing staff, they will establish a dedicated CECL transition team that operates separately from the accounting close team.

Becoming compliant is the first hurdle. Banks will also need to present and explain a potentially volatile estimate to stakeholders each reporting period. Answering questions from auditors, regulators and investors was the second topmost concern for survey respondents (27%).

SS&C is a global provider of financial services software and software-enabled services.