This is no time to stand still for IFRS 17 tech vendors

16 June 2020

Richard Hart

Richard Hart | Director - IFRS 17 Technology
Profile | Email | +44 (0)7881 736 872

Rumeer Shah

Rumeer Shah | Senior Manager
Profile | Email | +44 (0)7824 084668

Florence Hopper

Florence Hopper | Consultant
Profile | Email | +44 (0)7483 417140

‘To stand still is to fall behind’ is a phrase we’ve tirelessly used in our IFRS 17 webcasts and presentations. Nowhere does it apply more than our vendor analysis.

Back in December, we shared our Vendor 3.1 analysis and reported on the lack of a minimum viable product, data sourcing challenges for many premium allocation approach (PAA) eligibility tests, and sub-ledger requirements not being met.

But over the last six months, many vendors have had important software releases, some new solutions have emerged, and our review criteria has been refreshed.

Enter Vendor 4.0.

What are we seeing?

We have seen a number of vendors who provide IFRS 17 solutions reach a critical mass of global clients (six or more). There are observable patterns by region, for example the market leader in Asia Pac is not leading in EMEA.

Separately, on either end of the process spectrum, both actuarial- and accounting-focused vendors are establishing strong product offerings based on the strengths of their existing product suites. Scale brings pressure to deliver but it also creates more clarity on both the development areas and the strengths of these solutions. Roadmaps for the next 6 - 12 months continue to be far clearer and typically involve multiple releases.

IFRS 17 remains a very challenging standard with significant obstacles, namely the uncertainty around the finalisation of technical issues in the standard by the IASB. This has resulted in vendors prioritising their development activities based largely on their current clients’ interpretative demands, and although vendors have improved upon certain aspects of their solutions, their roadmaps attest to there being much more to do.

The rapid emergence of some late market entrants shows market leaders can still be caught, and no one yet has an end-to-end capability or a fully IFRS 17 compliant minimum viable product. This is verified by the significant development roadmaps from every vendor covering several complex topics and enhancements. It partly reflects the ongoing interpretative nature of the standard with limited market consensus on important measurement topics.

Does one size fit all?

The vendor market is entering an intense 9-12 month development period with all vendors focusing on enhancing and updating their core offering to reflect the guidance on TRG Tentative decisions as well as lessons learnt from ongoing implementations. At this time, we’d anticipated the market leaders to be close to offering an end-to-end solution, however, most vendors are continuing to work on fundamental capabilities.

A number of clients have started to review their IFRS 17 programme plans and, with IFRS 17 delayed by a year, are taking time to review their decisions. Several clients and vendors have started to look at alliances and multi-vendor solutions to meet the complex requirements of IFRS 17, including bespoke builds using rapid development tools. Some clients are looking at developing more technically and operationally complex measurements in-house rather than off-the-shelf.

What’s next?

Our Vendor 4.0 analysis is timely - containing software releases up to and including March/April 2020. Many of our clients are starting vendor selection processes or reviewing vendor decisions made previously. We encourage all of our clients to reach out to your local PwC contacts to find out more about Vendor 4.0. Later this month, we will post another blog on the detailed tax implications and reinsurance accounting capabilities examined in our review.

Don’t rely on vendor analysis from a year ago.

Don’t stand still.

Richard Hart

Richard Hart | Director - IFRS 17 Technology
Profile | Email | +44 (0)7881 736 872

Rumeer Shah

Rumeer Shah | Senior Manager
Profile | Email | +44 (0)7824 084668

Florence Hopper

Florence Hopper | Consultant
Profile | Email | +44 (0)7483 417140