XML (Extensible Markup Language) is widely used as the lingua franca for information exchange in banks and financial institutions but its importance is often overlooked. Failure to adopt XML and its related tools could cost banks large amounts of money and time.
“XML is a language that enables banks to communicate with each other and the regulatory authorities quickly and accurately,” says Brickendon Consultant Kourosh Mojar. “The costs of not using XML technologies efficiently are vast.”
In today’s era of financial compliance, the pressure on banks has never been greater to ensure they communicate correctly with their peers and regulatory bodies. By ensuring XML languages, such as ISDA, FpML and XBRL, are properly integrated into their information systems, these institutions are creating an appropriate framework in which to transparently adhere to the strict requirements of the financial regulators.
“If you try and deal with XML with a regular language, such as java in comparison to XML, you will go at 2mph,” says Brickendon Consultant and XML expert Charles Foster. “Using the right domain-specific tools (like XSLT) will get you from A to B very quickly.”
XML is used in every bank from top to bottom and left to right, transferring all sorts of information, including details of trades and positions. One of the common problems within large institutions is that a variety of solutions around XML systems can be badly designed and when something goes wrong, the cause of the problem is not directly addressed and short-term, quick-fix solutions are implemented. Instead, businesses should seek to understand how to strategise in this domain and make the solutions more durable.
To address these issues, Brickendon are helping their clients with XML-related activities, including regulatory reporting, such as the international standards for Volcker, EMIR and Dodd-Frank, which need to be aggregated as XML for regulation boards. At the XML London conference this summer, developers were encouraged to see XML from a different angle, and appreciate it not just for message handling, but also to embrace mature XML tooling and the related community that stands in its own right.
Developers also investigated the full potential of being up-to-date with tools like XSLT, XProc, Schematron, XQuery, XML databases, Big Data and Semantic Web technologies. According to Brickendon’s Mojar, XML is the ideal tool to address some of the concerns around Big Data storage, such as security and regulation.
The key to ensuring easy access to this enriched and reliable content is to keep transformation and validation components small, nicely scoped, grouped, dependable and to facilitate a neat framework from the outset, says Mojar. It is easy for the XML data and supporting tools to find gravity and get out of hand. XML tools, including XProc and Schematron, are useful in this area.
Closer to home, you may have realised at your company that an organic development of multistage publications and a lot of refined business-rule validation is happening. When maintaining your own pipeline abstractions, whether in Apache Ant, Java, XProc, etc. it helps to make repeating and sequencing data transformations: some steps to correct and normalise data and some steps to convert data, but all in smaller scoped plugin steps that can be understood as Business Analyst requirements.
You can follow this approach yourself to avoid convoluted technology and information systems, which can be hard to manage and update. When only one artefact of software is holding together many tactical and badly designed in-code implementations, it can be difficult to revisit, improve, or add to at a later date.
So, by ensuring you have a clear policy of encouraging the use of XML across your business, you will not only improve communication and transparency, but also reduce the risk of missing regulatory deadlines and failing to report information correctly.