Finance 2.0


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Finance 2.0

  1. 1. Finance 2.0 How XBRL Disrupts the Value Chain of Financial Reporting and Primes it for More to Come Rated PG
  2. 2. The Challenge To capture the benefits of moving finance from manufacturing mode to an integrated model
  3. 3. Overview What is XBRL? Efficient format & delivery Semantic Finance - the way forward What now?
  4. 4. Information wants to be free
  5. 5. Wo rd
  6. 6. Wo rd
  7. 7. <lev wth> erae gro nu ge> <Profitability> ve <...> <re
  8. 8. <...> th> <lev row erage> reven ue g < <Profitability>
  9. 9. -1424
  10. 10. EUR Mio -1424
  11. 11. Q3 2008 EUR Mio -1424
  12. 12. Q3 2008 EUR Mio Net (un)realised gains from -1424 financial instruments at fair value
  13. 13. Q3 2008 EUR Mio Net (un)realised gains from -1424 financial instruments at fair value
  14. 14. Q3 2008 EUR Mio Net (un)realised gains from -1424 financial instruments at fair value Data
  15. 15. Q3 2008 Meta- EUR Mio Net (un)realised gains from -1424 financial instruments at fair value Data
  16. 16. It’s all about tagging! Q3 2008 Meta- EUR Mio Net (un)realised gains from -1424 financial instruments at fair value Data Information
  17. 17. Can you handle this?
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  19. 19. How about this?
  20. 20. An information pyramid
  21. 21. An information pyramid Data
  22. 22. An information pyramid Information Data
  23. 23. An information pyramid Knowledge Information Data
  24. 24. 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
  25. 25. More XX‘s Taxonomies container of business logic comparable to chart of accounts, but more available for IFRS, US GAAP, many more Extensions
  26. 26. 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
  27. 27. 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
  28. 28. Key principles of an XBRL framework
  29. 29. User awareness lacking 9% high in EMEA at 66%! 32% 59% CFA Institute works on raising awareness Up-to-date awareness Aware Not aware
  30. 30. First: Disclosure neutrality Core taxonomy should be predefined by current financial reporting standards, including GAAP and other regulatory disclosure and reporting requirements.
  31. 31. Second: Limited extensions Taxonomy extensibility should maintain the level of data comparability as defined by GAAP and other regulatory requirements.
  32. 32. Third: Going global Ultimately, companies should deliver required financial reports to regulators using the established XBRL framework
  33. 33. Fourth: Open Source The general public should have equal access to the XBRL tagged information
  34. 34. 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
  35. 35. Semantic Finance? A Trojan rabbit about to invade finance
  36. 36. 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
  37. 37. Manual labour going strong 18% 37% Manual extraction high among specialist 34% analysts 11% Entirely manual Mostly manual Entirely 3rd party Mostly 3rd party
  38. 38. 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
  39. 39. Sustaining innovation? better performance of established products measured along historically established mainstream dimensions may be radical or discontinuous, but still sustains established firms
  40. 40. A matter of perspective
  41. 41. A matter of perspective
  42. 42. A matter of perspective
  43. 43. A matter of perspective
  44. 44. Price discovery, ca. 1920 Valuation Expecta- Valuation Expecta- concepts tions concepts tions Bid Ask Fundamental Fundamental Information Information
  45. 45. Price discovery, ca. 2000 Valuation Expecta- Valuation Expecta- Bid Ask concepts tions concepts tions Fundamental information
  46. 46. Price discovery, ca. 2015 Expectations Bid Ask Expectations Valuation Fundamental concepts information
  47. 47. Cognitive Surplus Mio hours spent
  48. 48. Cognitive Surplus 1,000,000 Mio hours spent 100,000 10,000 Mio hours 1,000 100 10 1 creating Wikipedia watching TV global p.a.
  49. 49. Cognitive Surplus 1,000,000 Mio hours spent 100,000 10,000 Mio hours 1,000 100 10 1 creating Wikipedia watching TV global p.a.
  50. 50. Cognitive Surplus 1,000,000 Mio hours spent 100,000 10,000 Mio hours 1,000 100 10 1 creating Wikipedia watching TV global p.a.
  51. 51. Cognitive Surplus 1,000,000 Mio hours spent 100,000 10,000 Mio hours 1,000 100 10 1 creating Wikipedia watching TV global p.a.
  52. 52. What now? utilisation through 3rd party (BB, Reuters) tools on http:// funds example at sec xbrl for dummies work with XBRL CH