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XBRL: One standard – many applications 46 by Bruno Tesnière, Richard Smith and Mike Willis the journal • Tackling the key issues in banking and capital markets Bruno Tesnière Richard Smith Mike Willis Partner, Global XBRL Co-leader Director, Global Risk Global XBRL Co-leader and Founding Management Solutions, UK Chairman XBRL International Tel: 32 2 710 72 26 Tel: 44 20 7213 4705 Tel: 1 813 351 2795 Email: [email protected] Email: [email protected] Email: [email protected] 47 XBRL is a universal information format and formatting of the information needed in these formats (html, pdf, doc, etc). which offers tremendous opportunities for for running the business can be slow, The link between format and content can the financial services industry in terms of prone to error and extremely costly. only be broken by manual parsing (search cost reduction, efficiency gains and data and retrieval) processes, which are labour- analysis. XBRL can be used by banks to Proprietary data standards are often put intensive, time-consuming and prone to radically reduce the time and costs in place for internal purposes but they inputting errors. These factors can drive associated with key business processes require proprietary data translation the cost of producing information up to such as credit analysis and monitoring, schemes so that back-end systems are able a level where, although the information and streamline their own business to retrieve that information. Even less is available, it is effectively redundant. reporting processes. XBRL also allows efficient, electronically delivered disparate information systems to information on the web is today just a XBRL provides a solution to many of communicate seamlessly with each other digital duplicate of a paper report; it is not these problems by making the reported over the internet. This is something banks possible to identify directly and therefore information more flexible for interested have aimed at for a long time; with the retrieve the information that is embedded parties to use. advent of XBRL they are finally able to achieve it. Figure 1 XBRL : One standard – many applications Financial information: Fuel for the financial services industry One standard Many applications Business reporting There have been dramatic changes in how Accounting systems TM (ValueReporting , balanced scorecard) companies communicate with investors, customers and suppliers. The financial Credit analysis services industry is dependent on the quality and timeliness of business Preparation of regulatory information Other sources of information XBRL information, perhaps more than any other (Basel II) industry, as it is both a user and producer of such information. Today, in many banks Financial consolidation process management information is buried under a mountain of irrelevant figures or is Specific banking information system Management reporting presented as complex raw data, whilst external sources are rarely available in Source: PricewaterhouseCoopers reusable formats. The collection, collation the journal • Tackling the key issues in banking and capital markets XBRL: One standard – many applications continued... 48 So what exactly is XBRL? Figure 2 What XBRL is not: Extensible Business Reporting Language, You may already have heard about XBRL. The word is certainly getting out and, or XBRL, is a derivation of Extensible unfortunately, so are the misconceptions. Below is a list of what, exactly, XBRL is not: Mark-up Language (XML). XML, a platform-independent communication • XBRL is not a detailed universal chart of accounts, but rather a standard, has been designed to facilitate GAAP/industry-sector oriented tagging scheme or language; the exchange of information between applications through corporate networks • XBRL is not a new accounting or auditing standard; or the internet. Supported by virtually all software vendors, XML is gradually • XBRL is not designed only for US GAAP financial reports but rather imposing itself as the primary facilitator for oriented to a range of territories as well as IFRS (International Financial transferring data over the internet and is Reporting Standards formerly IAS) business reporting; and now entrenching itself in enterprise applications. XBRL has been specifically • XBRL is not a requirement to conform to a specific financial designed to leverage XML technology to reporting template. support the business reporting supply chain. XBRL International XBRL International is a non-profit international consortium consisting of approximately 170 leading companies, associations and government agencies around the world and fulfilling several roles such as development, liaison and education. The consortium has built an XML based specification for business reporting as well as standardised data definitions for different financial reporting frameworks, for use in ledger entry reporting (XBRL General Ledger), credit reporting, performance press releases, risk reporting, regulatory filings and tax filings. PricewaterhouseCoopers has recognised the benefits that XBRL could bring to its clients and to the financial markets and has dedicated resources supporting the efforts of the XBRL consortium. Since the inception of XBRL, PricewaterhouseCoopers has taken a leading role in its development1. 1 For more information, visit www.xbrl.org the journal • Tackling the key issues in banking and capital markets 49 Fujitsu, Moody’s, Reuters Group, Figure 3 XML/XBRL architecture PricewaterhouseCoopers and many others. Members of XBRL International are Printed Regulatory Tax Bank currently developing taxonomies for financial Website filings returns filings statements different accounting standards such as IFRS (IAS) and US-GAAP, and where industries, such as financial services, are Organisation’s data Instance significant these taxonomies are also document expected to be tailored to meet the Organisation’s data specific requirements of that industry. definitions Standardised data definitions Taxonomy XBRL for the Financial Services Industry Common basis of XBRL XBRL Specification Because of the high volume of financial XML Schema information prepared and processed by the XML financial services industry, it is in a unique Source: PricewaterhouseCoopers position to leverage XBRL technology. While there are numerous applications XBRL provides tags (context) that describe reports. As a result, banks are able to where XBRL can support business each element of data (content) in greater generate complex data queries and processes, in this article we will take the detail so that information can be comparative and up to date analyses on a opportunity to focus on three specific understood and used by different borrower’s credit application information applications where XBRL can greatly information systems. For example, the package at the touch of a button, something support financial institutions in particular. turnover for a specific company, and that that is almost unimaginable today. from its corresponding reporting period, Credit analysis will be included in tags, along with further The tags are based on standard and Credit is the most fundamental risk that information such as company name, uniform taxonomies defined and agreed many financial institutions take and country of origin, industry sector, year and through collaborative efforts of XBRL manage. Traditionally, credit processes so on. The tagging of data instructs the consortium members. XBRL International within different business units are receiving system about the information is made up of many of the world’s leading supported by stand-alone information being transferred and so the user, with the accounting, technology, government and systems and reporting sub-systems. help of a software application, can locate financial services bodies, including These systems assist management in credit the necessary information without leafing Morgan Stanley, Hitachi, General Electric, analysis, credit decision-making and limit through numerous pages of financial Microsoft, Deutsche Bank, Bundesbank, the journal • Tackling the key issues in banking and capital markets XBRL: One standard – many applications continued... 50 monitoring (see Figures 4 and 5). Figure 4 XBRL and Credit Analysis Transferring information from counterparties to in-house systems as well as from one Without XBRL stand-alone system to another normally Receiving financial Inputting data into a requires inefficient, tedious and time- Credit analysis information from client financial analysis tool consuming re-keying and re-formatting of information. Such mechanical processes Time consuming mechanics increase the risk of inputting errors and reduce the efficiency of credit assessment With XBRL and monitoring. In many cases 80% of Receiving financial Automatic transfer into Credit analysis process time is allocated to data information in XBRL a financial analysis tool management with 20% left for analysis. Automatic, consistent process XBRL can reverse this ratio, allowing greater time for valuable decision making. Result XBRL provides banks with a structure and • Reduction in lead time for credit decision procedure, allowing consistent analysis and • Analysis is based on more meaningful data reporting. It also helps ensure better data • More time for credit analysis • Improved risk management quality and data integrity, leading to clearer and more accurate business reporting. Information received from borrowers can be directly recognised, manipulated
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