Finance 2.0

Finance 2.0 How XBRL Disrupts the Value Chain of Financial Reporting and Primes it for More to Come Rated PG

The Challenge To capture the beneﬁts of moving ﬁnance from manufacturing mode to an integrated model

Overview What is XBRL? Efﬁcient format & delivery Semantic Finance - the way forward What now?

Information wants to be free

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EUR Mio -1424

Q3 2008 EUR Mio -1424

Q3 2008 EUR Mio Net (un)realised gains from -1424 ﬁnancial instruments at fair value

Q3 2008 EUR Mio Net (un)realised gains from -1424 ﬁnancial instruments at fair value Data

Q3 2008 Meta- EUR Mio Net (un)realised gains from -1424 ﬁnancial instruments at fair value Data

It’s all about tagging! Q3 2008 Meta- EUR Mio Net (un)realised gains from -1424 ﬁnancial instruments at fair value Data Information

Can you handle this?

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How about this?

An information pyramid

An information pyramid Data

An information pyramid Information Data

An information pyramid Knowledge Information Data

XBRL in short eXtensible Business Reporting Language web standard derived of XML disaggregates unwieldy information packages into constituent semantic elements separates technical and business speciﬁcations open, royalty-free property of XBRL International

More XX‘s Taxonomies container of business logic comparable to chart of accounts, but more available for IFRS, US GAAP, many more Extensions

Global reach Central organisation XBRL International Many local jurisdictions local awareness locally relevant taxonomies quick adoption in many countries: USA, China, India, Japan, NL, Germany, France

XBRL in Switzerland founded in 2008 „Provisional Jurisdiction“ of XBRL International members from academia, accountancy, ﬁnancial analysis, preparers etc next event 22 October with kick-off for Swiss GAAP and OR taxonomies xbrl-ch.ch

Key principles of an XBRL framework

User awareness lacking 9% high in EMEA at 66%! 32% 59% CFA Institute works on raising awareness Up-to-date awareness Aware Not aware

First: Disclosure neutrality Core taxonomy should be predeﬁned by current ﬁnancial reporting standards, including GAAP and other regulatory disclosure and reporting requirements.

Second: Limited extensions Taxonomy extensibility should maintain the level of data comparability as deﬁned by GAAP and other regulatory requirements.

Third: Going global Ultimately, companies should deliver required ﬁnancial reports to regulators using the established XBRL framework

Fourth: Open Source The general public should have equal access to the XBRL tagged information

Fifth: Co-operation Regulators should develop the necessary infrastructure and protocol to ensure the timely updating of the established XBRL framework as outlined in the preceding four key principles

Semantic Finance? A Trojan rabbit about to invade ﬁnance

What is the Semantic Web? The Semantic Web is ... a vision for a future web of meaning not separate, but an extension of the current web a way for machines to better process & understand data a web on which machine reasoning can become ubiquitous and powerful describes a set of standards, ML & tools

Manual labour going strong 18% 37% Manual extraction high among specialist 34% analysts 11% Entirely manual Mostly manual Entirely 3rd party Mostly 3rd party

Disruptive innovation? worse performance near-term different value proposition cheaper, simpler, smaller, and more convenient launched in new or insigniﬁcant markets leading customers do not want it at ﬁrst

Sustaining innovation? better performance of established products measured along historically established mainstream dimensions may be radical or discontinuous, but still sustains established ﬁrms