IBOR Transition

A technology-enabled approach

The ending of Interbank Offered Rates (IBORs) will likely lead to major changes across a broad suite of financial products and markets. IBOR rates will cease to be published on 30 June 2023, and the effects will be significant. Banks will have to work through contracts worth hundreds of trillions of dollars to determine which require renegotiation. The number of counterparties, complexities of the documents, the potential for negative client experiences and the risk of conduct issues require that this process be properly orchestrated.  

The situation is highly complex, with significant inherent downside risks. Points of impact to consider as you plan for the future:

• Negative and confusing client experiences
• Conduct issues where clients have not been treated fairly
• Challenges in aggregating progress across different lines of business
• Missed or ineffective hand-offs between commercial and legal teams
• Elevated operational risk (e.g., incomplete outreach, where clients or contracts fall between the cracks)
• High costs of manual tracking and processing
• Lack of audit trail and evidence
• Lost stakeholder and regulator confidence if reporting is unreliable
• Inability to quickly respond to market changes and ongoing regulator requests

How EY can help

Getting this right at scale requires skill, extensive domain knowledge and leading-edge technology. With the combination of an open architecture and powerful business insights, EY teams and Pega can uniquely help manage the back-book transition process and requirements to effectively solve for the transition challenge.

Key features of the EY–Pega approach are:

• A full and complete solution to the transition problem, no solving in silos
• A single and joined-up technology approach which leverages leading-edge tooling to solve each stage
• Use of third-party products that are widely adopted and offer “low code,” which are adaptable to tight timeframes
• An open architecture, with integration into document repositories, reference data systems and CRM systems
• Re-use of existing tooling where it is considered fit for purpose
• Recognition that control and measurement are critical, hence exposure dashboards and management information are central to the design
• Licenses as part of an engagement of “as a service”
• On premise or cloud-hosted
• Flexible delivery models
• Managed service (“we do it for you”)
• Co-delivery (“we do it with you”)
• Consulting (“we advise you how best to do it”)
  
  

How to get started

It’s critical to start by understanding the scale of your particular IBOR transition challenge. Our experience has shown that clients are underestimating the size and complexity of the challenge ahead. Collectively, we would seek to clarify volumes of counterparties and contracts, your current thinking on outreach requirements and client journeys, and the landscape of current systems and existing tooling to provide a transition program assessment. 

Based on our program assessment and identification of likely gaps, we would demonstrate our outreach backbone and relevant point solutions across stakeholders from legal, commercial and program teams. Delivery models and solutions can be tailored to client needs and a pilot exercise can be defined so that stakeholders are comfortable with the proposed solution. From start to finish, EY teams can support your end-to-end outreach journey for a complete and successful transition.

Learn more about EY IBOR transition services.