The world of digital reporting is set to be revolutionized as the XBRL format continues to evolve, making it faster, simpler and more cost-effective to extract, sort, compare and analyze large amounts of financial data.
Standing for “eXtensible Business Reporting Language”, the open international standard is used by more than 50 countries around the world. Millions of XBRL documents are created every year, replacing paper-based reports with digital versions that are more accurate and have a wider array of useful applications.
The European Banking Authority (EBA) is leading the way, with plans to roll out XBRL format enhancements by the end of 2024. And so, banks and regulators have no choice but to follow suit and adapt accordingly.
XBRL is a structured way of digital reporting that automates data handling. As per XBRL International, the not-for-profit consortium that manages the open standard, XBRL provides a digital language whereby reporting terms are “authoritatively defined” using tags.
Those tags are used to extract financial data contained in compliance, performance and business reports in a unique, consistent and standardized way. As a result, information moves between organizations quickly and accurately.
XBRL can be traced back to 1998 and the efforts of Charles Hoffman, a Certified Public Accountant from Washington. After going through several versions, XBRL v2.1 was published in 2003.
By 2005, the Committee of European Banking Supervisors (CEBS) revealed plans to implement digital reporting using XBRL, because of its “positive effect on market efficiency”. Other early adopters include the Securities and Exchange Commission (SEC), the UK’s HM Revenue and Customs (HMRC), and Singapore’s Accounting and Corporate Regulatory Authority.
Fast forward to 2022 and a host of organizations use XBRL, including governments, data providers, regulated companies, analysts, accountants and investors.
The current format was defined by the XBRL v2.1 specification and is called xBRL-XML. It integrates the following in one XML file:
- Context elements of the taxonomy: tagging, plus characteristics and dimensions of the data
- The fact – amount, rate, numerical value, date, wording – associated with each tag
That format works well for synthesis reportings: content and layout are defined, avoiding redundancies. But there are downsides, including:
- Format is hard to read and difficult to understand for final users
- Transformation phase of the taxonomy is complicated and requires a specialized XBRL engine
- Data declared in the xBRL-XML file is complex
- Large files are produced, requiring bandwidth to upload, plus resources to validate and analyze
On top of that, xBRL-XML isn’t suitable for large volumes of data and granular reporting, which becomes more of an issue when integrated regulatory reporting is implemented.
Given these weaknesses, two new formats – xBRL-JSON and xBRL-CSV – were developed using the Open Information Model (OIM), a strategic initiative designed to simplify and modernize XBRL.
To summarize, xBRL-JSON is a widely supported language that converts all concepts, data and their links to templates in an easy and understandable way. This format is ideal for automated consumption and analysis. Meanwhile, xBRL-CSV generates efficient CSV files – more compact than XML and suitable for large volumes – that are well-suited for tabular reports with a large number of facts or for granular reports.
There are a number of benefits to OIM’s highly flexible syntax-independent platform, including:
- Differentiation of metadata and data
- File sizes reduce by more than 80% compared to XML
- Consistent format that’s easy to read and understand
- Potential for faster validation
- Supports granular reporting and semantic databases
- Lower costs and less maintenance
The EBA aims to substitute xBRL-XML with xBRL-JSON and xBRL-CSV by the end of 2024, meaning National Central Banks (NCBs) must follow suit.
Most NCBs have not yet adopted the new xBRL-JSON and xBRL-CSV formats. For example, ACPR – the French supervisory authority – switched from SURFI (Système Unifié des Reporting Financiers) to RUBA (Reporting Unifié des Banques et Assimilés) at the start of 2022, keeping the xBRL-XML. In the UK, the BOE did the same recently by choosing xBRL-XML format for its new BEEDS submission platform.
And now, NCBs are facing further technical updates as they prepare to implement xBRL-JSON and xBRL-CSV. Despite that, the EBA is forging ahead with the transition, meaning regulators are racing to develop remittance systems that replace xBRL-XML with the new formats. On top of that, regulators also need to upgrade their internal tools to support national taxonomies integrating JSON files.
These changes come at a cost, but the alternative – developing a system capable of managing all three formats – is an even more expensive and complicated proposition.
As a founding member of XBRL France back in 2005, Sopra Banking Software follows developments closely, and our platform is natively compatible with XBRL standards. Our philosophy is all about shielding end users from the complexity of XBRL formats, ensuring they focus their time on business matters rather than technical ones, saving them from learning all the XBRL concepts that might change over time and focusing only on business definitions.
With the switch to xBRL-JSON and xBRL-CSV, the EBA has chosen simplicity and efficiency, an approach that aligns with our vision and the new generation of solutions we’re developing.